Skip tracing: Collection Agency as Detective

Posted by Marilyn Miller on April 06, 2017  /   Posted in Uncategorized

Skip tracing involves looking for people. The term comes from private investigation firms who would look for information on people who had “skipped town”. In the world of bad debt collection, skip tracing involves finding new information (address, phone, email, assets) of customers who have moved.

skip_tracingHow important is skip tracing to the collection process? Lexis Nexis, a leading provider of research tools for law, government and collections estimates that 35% of delinquent debtors move annually and 50% of files placed for collection will need some sort of skip tracing.

In addition to a change of address, you may need to research who change names due to marriage or divorce, change their phone number, or get a new job. A file under consideration for possible legal action will be researched to make certain there are assets (job, bank account) to make the lawsuit worthwhile.

Your collection agency should provide skip tracing as part of their services. Although some agencies charge a higher contingency rate for collections involving skip tracing, you should not have to pay an additional fee for it.

Services like Lexis Nexis and Experian offer automated services collection agencies use. They send in a spreadsheet and receive back information pulled from the databases. A good deal of helpful information is available, but it is important to remember that these databases are pulled from public information, and if someone does not have something in their name – a utility bill, driver’s license – anything – your chances of finding them with this method is next to nothing. Still, it is a good first step.

Collection agencies may also can review credit reports not only to obtain contact and asset information, but to get an idea of the debtor’s ability to repay the debt.

Court and land records should be reviewed, if available in your state.  We once had selected a file for referral to our attorney. The debtor had a good job and owned a home, but when we checked the court records, she had multiple small claims judgments against her. Each judgment resulted in a lien on her home, and there was no longer equity available. What looked like a great suit turned out to be the opposite.

Skip tracing becomes an art when you take it to the next level and review the debtor’s social media profile. You would be amazed at how much information can be obtained from Facebook, LinkedIn or a simple Google search.

The last method of obtaining information is by contacting people who may know the debtor. However, there are many pitfalls with this process, including the violation of privacy and fair debt collection laws. The basic rule is that you cannot disclose information on the debt to a third party, only request new contact information, but it is a very slippery slope legally and I do not recommend it.

Research also needs to be done, as much as feasible, more than once. Public records take a while to catch up to the databases. I have often put files on hold for six months, and gone in to find valuable information that led to a successful collection.

A good skip tracer is good at putting pieces of the puzzle together. If you are looking to hire a collection agency, make certain to ask about their research capabilities. The better your collection agency is with research, the more money they will be able to recover for you.

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