When a customer defaults on payment, the initial step is often reaching out to address the missed payment. But what happens when the customer seemingly disappears without a trace?
In such cases, debt collection agencies employ various strategies to recover outstanding payments effectively. One of the most valuable techniques in their toolkit is skip tracing.
What Is Skip Tracing?
Skip tracing is the process of locating a debtor who has “skipped” or left town, hence the name. It’s a valuable tool for cases where a debtor has stopped responding to calls, emails, or other attempts to contact them.
Even when a physical address is available, there’s a chance the individual no longer resides there. According to the U.S. Postal Service, nearly 30% of undeliverable mail stems from individuals moving without leaving a forwarding address or providing incorrect information. Without updated contact details, informing the debtor about their outstanding balance becomes difficult, reducing the likelihood of resolving the debt before it negatively impacts their credit score.
Skip tracing isn’t limited to debt recovery. It’s also widely used by private investigators, lawyers, journalists, detectives, and bondsmen. Though often confused with bounty hunting, the two are distinct. However, bounty hunters frequently rely on skip tracers, which has contributed to the misconception that the terms are interchangeable.
How Does Skip Tracing Work?
Skip tracing typically involves a structured series of steps:
1. Verification of Information
The process begins by confirming the details provided by the client and correcting any inaccuracies. This helps the skip tracer gain familiarity with the subject.
2. Information Gathering
The next step involves collecting as much data about the subject as possible, using publicly available resources such as:
- Credit reports
- Public records databases
- Loan applications
- Criminal background checks
- Job applications
- Courthouse records
- Utility bills
3. Contacting Connections
If these sources don’t yield helpful information, the skip tracer may reach out to individuals connected to the subject, including neighbors, landlords, relatives, friends, or coworkers.
In the past, skip tracing required significant manual effort, such as traveling to specific locations, speaking with acquaintances, and poring over public records in libraries. Today, thanks to advancements in technology and the internet, skip tracers can often locate individuals much more quickly.
Open-source databases, both free and paid, have greatly expanded the resources available to skip tracers, making the process faster and more efficient.
How to Hire a Skip Tracer
Hiring a third-party collection agency with a dedicated skip tracing department can often be more cost-effective than working with an independent skip tracer. Many collection agencies operate on a contingency-fee basis, meaning no fees are charged if the debt isn’t recovered. In contrast, most independent skip tracers charge by the hour.
When seeking a skip tracer, research various options to determine whether an independent tracer or a collection agency is better suited to your needs.
Conclusion
If a customer goes “off the grid” after failing to pay, skip tracing can help locate them and recover the debt. Consider partnering with a collection agency or a skilled skip tracer to streamline the process and get back what is owed.
