Why you should add a Pacer account to your tenant screening

Question

Pacer: Public access to court electronic records. This account allows you practically real time access to federal court and bankruptcy cases, up to 300 pages of access per quarter for free starting 1/1/20. As of now you have 150 pages of free document access per quarter. 10 cents per page/search after free usage amount is utilized.

We are always looking for better and more effective screening techniques. We have experienced a unique scenario where we will now be using a Pacer account in addition to our existing tenant screening moving forward, and why you might want to as well. Here is the story:

Back on 3/20/2019 we screened tenants via TU smartmove. Tenants credit scores, a family, were low to mid 600's due to some higher utilization with moderate debt, but showed no bankruptcy in the public records section or debt levels that their income per our verification couldn't afford. Excellent references. No evictions. Lovely family, we approved them.

They have not been forthcoming with the rent and informed us that they will be filing chapter 7 BK. They have found and been approved for another more affordable property elsewhere, provided us a signed letter attesting to this from new landlord with specific address and move in date, and will be vacating on a specific date this month. Tenants have taken excellent care of property and have appeared cooperative so far. Relationship remains non-combative and professional.

Tenants SD was applied to all past due rent as to limit balance if we were to get nominated into the BK, which according to tenant was imminent. Client didn't want to take the risk so we applied SD, even if it shortly delayed ability to evict. Double edged sword. Tenant several days later stated BK had been filed and eviction was unnecessary as they will be out within 10 days. Long story short, after some research, we created a pacer account to search any current BK activity.

Not only have they not filed, they reopened an existing BK back on 2/1/19, a full 50 days before we screened them where it never showed up... This is a HUGE lag time between when its filed with the court system, and when it's actually updated and posted to the CRA's. Totally unacceptable. I called TU Smartmove to ask how long it takes for a BK to go from the filing date to their screening records and no one could give me an answer. Not confidence inspiring. Their debts were discharged on 3/31/19, one day before they moved in... Had we had the Pacer account and conducted a free party search via SSN, we would have been alerted to the open BK and declined them. We also know now that tenant is lying about just filing a BK, and simply dangling it to delay and or avoid eviction until moving into their next place.

Learning everyday. Hopefully this situation can help you avoid this situation in the future. Rising tides raise all ships.

This is an ongoing situation.

Account Closed · Answer

While PACER is useful in many ways, it's unclear how it would have helped in this situation. If their debts were discharged before they moved in, it has no bearing on your agreement with them (other than you have more protection because they have been released from previous debt so more money can go to paying you rent.). Bankruptcy law is complex and easy to misunderstand.

John Teachout · Answer

A bankruptcy is a clear indication of the inability of a person to pay their debts. I don't want them as a tenant as financial responsibility is a primary consideration in our screening process. And I wouldn't loan money to a company that was in bankruptcy either. (if I had it to loan, lol)

Mary M. · Answer

As a general comment, I always find it interesting that businesses can file for a BK and no one blinks, but god forbid a struggling family does - they are banned from decent housing and made pariah. I think that as usual “it depends” might fit when dealing with BK. Thank you for the info re PACER. great info.

Nicholas Darracq · Answer

Hi Mary. We don't hold a BK against someone if it was long ago and they have rebuilt. Things happen in life. A recent BK, let an open one, doesn't inspire confidence in the tenants financial responsibility. An open BK during tenancy can greatly increase the time, complexity and cost to conduct an eviction.

Nicholas Darracq · Answer

Thanks for your comment Mike M. you are certainly correct in that their discharged debts allowed them more money to pay our rent. The fact that it was discharged 1 day before the move in was simply chance. Had we used the PACER account on the 20th when we screened them we would have seen an open BK and simply passed on these tenants to begin with. Their open BK could have easily extended into their tenancy period with us, creating unnecessary risk and complicating an eviction in the event of immediate non payment. We are always on guard against "professional tenants" working the system. My view is that PACER is a practically free system that would have provided us additional highly relevant information about the tenants that would have changed our initial decision that our screening flat out didn't show.