Debt Collection: 5 Situations That Call for Skip Tracing

When it comes to debt collection, having a reliable channel for communication with the debtor is essential for ensuring timely payments and resolving any issues that may arise. However, when traditional communication methods fail, skip tracing becomes a vital tool for locating individuals who have become difficult to reach. Understanding when to employ skip tracing in debt collection is crucial for optimising your collection strategy. Doing so allows you to deploy resources effectively, enhance recovery rates, and streamline the overall debt collection process. 

Common Reasons for Skiptracing in Debt Collection

From outdated contact information to suspicions of fraud, the following explores various scenarios that can contribute to the need for skip tracing in debt collection. Keep in mind that deciding when to employ skip tracing isn’t necessarily tied to a single factor or event. Instead, it’s often a combination of circumstances that signal the need for this method. 

1. Outdated contact information

One of the most common reasons to use skip tracing in debt collection is when a debtor’s contact information becomes outdated. Over time, individuals may change their phone numbers, move to a new address, or switch email accounts, often without notifying their creditors. This can make it difficult for debt collectors to maintain communication and recover the owed debt. 

Skip tracing is particularly useful in these scenarios because it leverages various databases and investigative techniques to track down the most recent and accurate contact details of the debtor. This process may involve accessing public records, such as property deeds, voter registrations, and business filings, which can provide updated addresses or other contact information. By using skip tracing when contact information is outdated, debt collectors can re-establish communication with the debtor and minimise the risk of the debt becoming uncollectible.

2. Unresponsive to communication

When a debtor is unresponsive to the usual methods of communication—such as phone calls, emails, or postal mail—it’s a strong indication that they may be avoiding contact. This lack of response could be due to several reasons:

• Intentional Avoidance: The debtor may be deliberately ignoring attempts to reach them, hoping to evade payment responsibilities.
• Changed Contact Details: As discussed above, the debtor might have changed their phone number, or email address, or moved to a new location without updating the relevant parties for debt collection.
• Miscommunication: There might have been an oversight, or the debtor may not have received your messages due to incorrect contact details or technical issues.
• Temporary Circumstances: The debtor could be dealing with personal issues, such as illness, travel, or other life events, which temporarily prevent them from responding.

In these situations, skip tracing becomes a valuable tool for locating alternative contact information. Skip tracing can help identify new phone numbers, email addresses, updated residential or business addresses, or even social media profiles that provide clues to the debtor’s location. By uncovering these new contact points, skip tracing enables debt collectors to reestablish communication with the debtor. 

3. Suspected Fraud

Debtors involved in fraudulent activities often go to great lengths to evade detection. They may use false identities, change addresses frequently or even operate under different business names. Skip tracing employs sophisticated techniques to track down such evasive debtors by cross-referencing multiple data sources and using advanced investigative methods.

Fraudulent debtors also might provide false or misleading information to avoid payment. Skip tracing helps validate the accuracy of the debtor’s provided details by checking against various data sources and tracing the flow of money. This process helps confirm whether the debtor is making an honest mistake or if they are trying to hide their real identity. It can also help uncover fraudulent schemes or patterns. For example, if a debtor is involved in a larger scam or fraudulent operation, skip tracing might reveal connections to other individuals or entities involved in similar activities.

4. Legal action is being considered

Skip tracing is often a necessary tool to ensure that all legal requirements are met before pursuing legal action. In any legal proceeding, the law requires that the defendant (in this case, the debtor) be formally notified of the action being taken against them. This process, known as “service of process,” typically involves delivering legal documents like summonses, complaints, and court orders. The service must be done correctly for the court to consider the action valid. If the service is not properly executed, consequences include long delays or case dismissal. Skip tracing plays a critical role in this process by ensuring that the debtor can be properly notified and served with legal documents. 

As a result, it is crucial to have the debtor’s accurate contact details before seeking legal action. Skip tracing helps creditors fulfil this obligation by helping creditors comply with service of process requirements, reduces the likelihood of legal disputes over service, and supports the efficient progression of the case through the courts.

5. High-value Debt

For large amounts of money in debt collection, investment in skiptracing is often justified and beneficial. The costs associated with locating and contacting the debtor can be outweighed by the potential recovery of a substantial sum. Debtors with high-value obligations may be more inclined to evade collection efforts. They might use sophisticated methods to hide their whereabouts or financial status.  

Skip tracing helps overcome these challenges by utilising advanced techniques and databases to uncover hidden or hard-to-find information. Additionally, skip tracing can help locate assets such as bank accounts, real estate, or other valuable items that might be used to satisfy debt collection. This information is particularly useful when considering enforcement actions like garnishments or property seizures. For businesses with many delinquent accounts, skip-tracing tools can streamline the process of multiple debt collection cases. Investing in skip-tracing services or professionals can significantly improve the likelihood of recovering the debt.