Glossary
Skip Tracing
Skip tracing is the process of locating a debtor that has moved, closed, changed names, or stopped responding, along with its owners, new locations, or assets.
The term comes from the idea that a debtor has 'skipped' town. In commercial collections, a skip might be a company that vacated its office, a contractor that stopped answering its phone, or a business that closed and reopened under a new name. Skip tracing is the investigative work of finding where the business or its principals went and whether they still have income or assets that could pay the debt.
Commercial skip tracers draw on a range of sources. These include state business registries, fictitious name and assumed name filings, UCC filings, court records, property records, licensing boards, professional and trade directories, websites and social profiles, and commercial data services. Access to some databases is limited to users with a permissible purpose under federal laws such as the Gramm-Leach-Bliley Act and the Driver's Privacy Protection Act, and state rules may also apply. Reputable agencies use these tools within those limits and do not use pretexting or other deceptive methods.
Here is a fictional example. A restaurant equipment dealer, Copper Kettle Supply, is owed $19,000 by a bistro that closed without notice. A skip trace finds that the owner formed a new LLC three months later, registered at a different address in the same county, and that the new entity holds a liquor license. The trace also turns up a UCC filing showing the new company financed kitchen equipment. That information helps the creditor and its counsel evaluate whether the new entity can be pursued, along with any personal guarantee.
Skip tracing matters to a creditor because a judgment or demand is useless if the debtor cannot be found. Finding a current address supports proper service of process, and finding assets helps decide whether litigation is worth the cost. Starting the trace early, while the trail is fresh, usually produces better results than waiting until the account is years old.
Example
Copper Kettle Supply's skip trace finds the closed bistro's owner formed a new LLC nearby, with a liquor license and a UCC filing for financed equipment.