Skip Tracing and Personal Guaranty


If you’ve considered hiring a collection agency to handle your past-due accounts, you may have heard the term “skip tracing.” But what exactly is it, and how does it work within the collections industry?

Skip tracing is a method used to locate debtors when their contact information is no longer accurate. (For instance, the debtor may have moved, and the creditor does not have updated contact information.)

The obvious indicators:

Disconnected phone
Wrong phone number
Returned mail

The skip tracing process can run the gamut from checking phone books to searching through massive amounts of publicly and privately available information on the web. Oftentimes, companies must purchase access to this information. The alternative is to hire a professional and fully compliant collection agency that offers this access as part of their services.

Because the process can be both time- and labor-intensive, it requires specialized expertise and access.

Commercial Skip Tracing

Skip tracing methods differ depending on whether the debtor is a commercial account or consumer debt.

In commercial collections, the credit application is the starting point. Often times from the credit app, the skip tracer can access secondary names, cell phone numbers, additional phone numbers and email addresses, a second business location, names of vendors/banks used as references, as well as other individuals involved with the business. This important, but often incomplete application, offers clues that will aid the investigative steps in locating the proper party.

There are other tools and avenues available on-line , such as access to the Secretary of State’s database to see if the business is still in operation, review the articles of incorporation, determine if their corporate charter is current, obtain officers, and registered agent for the entity being researched. Every state except New Jersey, this information is available online at no charge.

If there is a personal guaranty for the commercial credit, the skip tracer will pursue payment from the individual guarantor, and a written demand can be sent to that individual. (The best protection a creditor can have is a personal guaranty by one or more of the officers of the corporation. See “About the Personal Guaranty,” below.)

The BARR Credit Advantage
At BARR Credit Services we subscribe to several locator databases. If the company is setup as a sole proprietorship or a partnership, we can search for the owner or partner and assign the debt to that individual or individuals.

If the company is incorporated as a Limited Liability Company (LLC) or a Limited Liability Partnership (LLP) or even Chapter S corporation, we can also sometimes determine and locate the partners of the company.

NOTE: This is not a task for the inexperienced or untrained. If you don’t know what you’re doing, you can easily and inadvertently violate privacy laws.

This story first appeared on the BARR Credit website.  They are our preferred collections partner.  


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