How do I check if a contractor has filed for bankruptcy?

Bankruptcy filings are federal court records and are 100% public. Every Chapter 7, Chapter 11, and Chapter 13 filing appears in the PACER database (Public Access to Court Electronic Records) and CourtListener.com (free headline search, paid full-document access).

The three chapters that matter:

- Chapter 7: Liquidation. All non-exempt assets sold to pay creditors, remaining debts discharged. The business effectively ends. - Chapter 11: Reorganization. Business continues operating under court supervision, restructures debt, emerges as a going concern. Common for mid-sized commercial contractors. - Chapter 13: Wage-earner plan. Available only to individuals (or sole proprietors). Repayment plan over 3-5 years.

Why bankruptcy matters when hiring a contractor:

1. Active Chapter 7 in the last 12 months: high failure risk. The contractor is in active financial distress. Money paid to them may be subject to claw-back to the bankruptcy estate. The contractor has no resources to complete the project if their cash flow tightens further.

2. Discharged Chapter 7 1-3 years ago: moderate risk. The contractor has had time to rebuild but creditors from the old entity are gone. Check for evidence of recovery — new entity, new bond, current insurance, recent successful projects.

3. Discharged Chapter 7 4+ years ago: low risk if rest of the record is clean. Bankruptcy is not permanent, and a contractor who has rebuilt for 4+ years has a track record to evaluate.

4. Chapter 11 in progress: depends on the case. Some contractors emerge stronger. Others limp through and exit with reduced capacity. Read the docket and the disclosure statement.

5. Chapter 13 (personal): less directly applicable to LLCs, but a sole proprietor contractor with personal Chapter 13 has documented financial distress.

How to search:

1. PACER (pacer.uscourts.gov). Free account, $0.10 per page for documents. Search by debtor name. Identify cases filed in any federal bankruptcy court — bankruptcy is federal, not state.

2. CourtListener.com. Free headline search. Useful for initial discovery; for full documents, switch to PACER.

3. State court records sometimes show related state lawsuits and judgments tied to a bankruptcy.

4. Secretary of State filings often show the entity status changing (Dissolved, Inactive) around the time of a bankruptcy.

5. Cross-check the personal name of the qualifying party. Many contractors run the company through an LLC but file personal bankruptcy themselves.

What to do if you find a bankruptcy:

- Recent and discharged (less than 24 months): walk away unless the rest of the public-records picture is impeccable. - Older (4+ years) and discharged: ask the contractor to explain. A legitimate contractor with a one-time business failure may have learned from it. Multiple bankruptcies, or one with fraud findings, is a hard stop. - Pending Chapter 11: investigate the case docket. Has the contractor proposed a plan? Is the plan confirmed? Are key contracts assumed? Has the unsecured creditors committee weighed in?

Groundcheck (earthmove.io/trust) searches PACER and CourtListener for federal bankruptcy filings on every report. Free tier shows headline match; Deep Dive ($19) includes case number, filing date, chapter, and current status with citation. For full document review on Chapter 11 cases, use PACER directly.

Bankruptcy filings are also a reason behind phoenix-company patterns. The contractor files Chapter 7, walks away from creditors, and re-forms a new LLC under a slightly different name. Groundcheck's phoenix detection cross-references entity formation against historical bankruptcy filings.