Executive Summary: Understanding federal vs state court records is the difference between a thorough litigation check and a misleading one. The two systems are separate, hold different cases, and use different access tools, so a lender that checks only one is missing a large share of the picture. State courts handle roughly 98% of all cases filed in the United States, while federal courts handle a narrower set including bankruptcy and federal-question disputes.[1] This guide explains what lives in each system, when a lender should check which, and where Cobalt's Court Records API fits, honestly, on the state side.
What is the difference between federal and state court records?
What lives in the federal system?
Federal courts hear cases arising under federal law, disputes between parties in different states above a dollar threshold, and all bankruptcy cases. Federal case files, the docket sheet plus filed documents, are accessed through PACER, which provides access to documents across the federal court system.[2] Bankruptcy is the field a lender most often needs from the federal side, because it directly affects collectability.
What lives in the state system?
State courts handle the overwhelming majority of business litigation: contract disputes, collections, money judgments, and most foreclosure actions.[3] Each state, and often each county, runs its own records system, which is why state court data is fragmented across thousands of venues rather than centralized like PACER. A money judgment entered in a state court can attach as a lien against the debtor's property, making it a direct repayment-risk signal.[4]
When should a lender check federal court records?
What signals come only from the federal side?
Bankruptcy is the clearest one. A current or recent bankruptcy filing changes everything about collectability and is found in federal records, not state ones. Federal-question litigation, such as certain regulatory or interstate disputes, also lives here. When a lender needs to know whether a borrower is in bankruptcy, the check runs against the federal system through PACER, not against any state portal.
What does Cobalt not do here?
Be explicit: Cobalt does not pull PACER and does not return federal court or bankruptcy data. PACER and federal records are industry context in this guide, not a Cobalt capability. A lender that needs federal or bankruptcy coverage uses PACER or a federal-records vendor directly. Cobalt's Court Records API covers the state side only, and only specific jurisdictions described below.
When should a lender check state court records?
What signals come from the state side?
Most of the litigation a small-business lender cares about is in state court: judgments against the business, active collections suits, and contract disputes. A judgment is the highest-value signal because it can become a lien with priority over later creditors.[4] For alt-lending and MCA underwriting, a pattern of state-court judgments against a borrower often matters more day to day than a remote federal filing.
Where does Cobalt cover the state side?
Cobalt's Court Records API covers two jurisdictions: New York State and Miami-Dade County, Florida. That is deliberately limited but strategically chosen, because New York is a major center for alt-lending and financial services and Miami-Dade is a hub for South Florida small-business lending. It is not nationwide and is not suitable for comprehensive 50-state litigation screening. Outside these two jurisdictions, route to a state portal or manual search.
How does Cobalt return state court data, and what does the call look like?
What does the API return?
For NY and Miami-Dade, the Court Records API returns judgment details (type, status, outcome), case information (case number, case type, court division), filing dates (filed, amended, resolved), parties involved (plaintiff and defendant names), and judgment amounts where available. Amounts are not always present, and older cases or certain case types may be missing depending on what the court makes electronically accessible.
What does the call look like?
The endpoint is asynchronous and callback-only. The lender supplies the business name, the jurisdiction, and a callback URL; results POST back, typically in 30 to 120 seconds. Search is by business name only.
curl --location 'https://apigateway.cobaltintelligence.com/courtCases?businessName=Acme%20Holdings%20LLC&jurisdiction=newYork&callbackUrl=https://yourapp.example.com/cobalt/callback' \
--header 'x-api-key: YOUR_API_KEY' \
--header 'Accept: application/json'The litigation question is not whether one system looks clean. It is whether you checked the right system for the signal you need: federal for bankruptcy, state for judgments, and a defined fallback wherever your coverage stops.
How should a lender combine federal and state checks?
What is a practical routing model?
| Signal needed | Where it lives | Cobalt's role | Action |
|---|---|---|---|
| Bankruptcy | Federal (PACER) | Not covered | Use PACER or a federal vendor |
| Federal-question litigation | Federal (PACER) | Not covered | Use PACER or a federal vendor |
| Business judgments, NY | State (New York) | Covered by Court Records API | Query by business name |
| Business judgments, Miami-Dade FL | State (Miami-Dade) | Covered by Court Records API | Query by business name |
| State litigation, other states | State portals | Not covered | Fallback portal or manual search |
Why does explicit fallback matter?
If a borrower operates outside NY and Miami-Dade, the API has no coverage there, and that absence is not a clean result. Route those files to the relevant state court system or a manual search, the same way state judicial portals expose public records.[5][6] Treating an uncovered jurisdiction or the federal side as "nothing found" creates a hidden gap, which is the failure mode this whole model exists to prevent.
What compliance limits apply to court records in lending?
How long can public records be used?
When court and public records feed a lending decision through a consumer report, the FCRA bars reporting most civil judgments and similar public records that predate the report by more than seven years or the governing statute of limitations, whichever is longer.[7] Regulation V implements these obligations and is the regulatory home for furnisher and user duties.[8]
Who owns the decision?
Cobalt is a data source, not a decisioning engine. The API reports what the covered courts make available. The lender sets the rule for what a judgment, an active suit, or a missing record means for approval, pricing, or decline, and applies the relevant compliance limits. This pairs naturally with pre-funding lien work in a UCC lien search workflow and with compliance screening in BSA/AML for alternative lenders.
What checklist should a lender use?
What should the litigation check include?
1. Decide which signal you need: bankruptcy and federal disputes versus state judgments.
2. For bankruptcy or federal-question matters, use PACER or a federal vendor; Cobalt does not cover these.
3. For NY or Miami-Dade business judgments, query the Court Records API by business name with a callback URL.
4. For other states, route to the relevant state court portal or a manual search.
5. Apply FCRA and Regulation V limits when records feed the decision.
6. Store the raw response, parsed signals, and the decision reason for audit.
How can a lender add the state court check?
Decide which jurisdictions in your book overlap with New York and Miami-Dade, then route bankruptcy and federal matters to PACER separately. To see the Court Records API return judgments and case detail by business name, you can book a Cobalt demo.
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