Methodology authored by Zach Wade, Wade Intel — operator-led lender tech methodology firm. Definitions validated against production borrower-validation runs with working bridge lenders. · Last reviewed 2026-07-10

What is Bankruptcy?

A federal court proceeding where individuals or businesses seek relief from debts they cannot pay. Chapter 7 (liquidation) and Chapter 11 (reorganization) are the most relevant to bridge lending. Bankruptcy filings are public records searchable through PACER.

Why it matters to bridge lenders

A borrower with a prior bankruptcy filing isn’t automatically disqualified, but it demands scrutiny. Was the bankruptcy discharged or dismissed? How recent? Does the borrower’s application disclose it? PulseClose searches federal bankruptcy records as part of every validation.

Example

Borrower applies for a $1.2M bridge loan. PACER search reveals a Chapter 7 filing from 2019, discharged in 2020. The borrower didn’t disclose this on their application — that’s the real red flag.

Related: Foreclosure, Notice of Default (NOD), Judgment Lien