Chapter 12

Locating a Hard-to-Find Debtor

In This Chapter

Deciding whether to do skip tracing in-house

Developing your skip-tracing skills

Accessing public records and other critical data

Putting together a plan of action

How does it happen? Some debtors seem to just disappear into thin air. You know they’re still around somewhere, perhaps just a few houses or businesses away from the address in your files. Or they may be halfway around the globe. Their phone numbers probably won’t help you figure out where they are, because call forwarding works all over the world. When you track down the new address they gave you, you may find that it’s a mail drop (such as a UPS Store).

How do you find a debtor who doesn’t want to be found? When a person disappears to avoid paying his bills, he’s known as a skip, and the process of locating him (and his assets) is thus called skip tracing. This chapter is devoted to the art — and it is an art — of skip tracing debtors. The tips and Web sites we provide can help you track down some of your difficult-to-locate debtors.

Two of the most powerful tools in the arsenal of the skip tracer are imagination and instinct. With an Internet connection, a phone, and perhaps a bit of luck for good measure, a skillful skip tracer can make it difficult for a debtor to avoid detection.

First Things First: Do You Want to Do This Yourself?

Unless you outsource your collections, someone within your company must be assigned the task of skip tracing. In performing this critical task, your skip tracer requires good sources of information and may, at times, need backup from a skip-tracing professional. When choosing among creating an in-house skip-tracing department, outsourcing the function entirely, or using a combination of both, your two principal considerations are cost and time.

From a financial standpoint, keeping skip tracing in-house is usually cheaper because outsourcing can quickly become expensive. On the other hand, professionals adept at skip tracing may be able to quickly “scrub” your files of uncollectible accounts by weeding out bankruptcies, deceased debtors, incarcerated debtors, and the like. This saves your collection people a lot of time and energy, and thereby saves you money.

Professionals can also help you develop skip-tracing strategies that are result-oriented and cost-effective. You may outsource skip tracing of individual debtors, businesses, or business owners. You can define parameters for your skip tracer and contract to obtain only the specific information you desire. Later in this chapter, in the section “Using Internet resources,” you find a number of companies that can serve as outsourcing agencies for your skip-tracing activities.

Regardless of the means you use, skip tracing is a crucial skill in collections work. You can’t collect from debtors if you don’t know where they are or don’t have a way to communicate with them.

The Art of Finding People: Using All the Resources Available

In the old days, skip tracing involved flipping through pages of a reverse directory — rather than looking up somebody’s address or phone number by the person’s name, you looked up names from listings of phone numbers and addresses. (The most important reverse directory, Bresser’s, is still available online at www.bressers.com.) Thumbing through White and Yellow Pages was also commonplace. Good skip tracers always had a Rolodex of helpful contacts, people whose names they had accumulated over time. One good source to have was somebody at the phone company who was willing to provide address and unlisted phone number information. Another was a contact at a public utility who had access to its thousands of customer records.

Today, the skip tracer’s well-guarded, private Rolodex of secret sources has largely been replaced by powerful Internet sites, jam-packed with detailed information on people and businesses. So much information, in fact, that it would stun an old-timer who skipped debtors before the 1990s. And a lot of it’s available for free!

Yet even with the advancement of technology, everything old is new again: The problem of information reliability has plagued skip tracers from the dawn of the industry, and it’s as much a problem as ever. Databases exist because somebody — be it a finance company, employer, business, or government agency — entered information into a computer. That information is generally accurate, but you inevitably find some that’s wrong. Factors that lead to errors include

Obsolete data: For example, much of the motor vehicle information in databases is obsolete. A debtor may have owned a car, truck, or boat at one time that has since been sold, junked, or repossessed, yet it may still show up on a report because those events were not recorded in the database.

To try to verify vehicle ownership, a skip tracer may use the most current information from the database to do a “drive-by” past a debtor’s location to see whether the vehicle is still there, or cross-reference ownership records to vehicle license plate records to see whether the debtor still has plates for the car she reportedly owns.

Consumer confusion or identify theft: For example, John Smith, John Smith Jr., and John Smith III may be grandfather, son, and grandson, and they may all live (or have lived) at the same address. Imagine the possible confusion of asset information in a database or credit report as to which John Smith owns particular assets or is responsible for particular liabilities. Similarly, identity theft compounds the challenge by introducing fake information into databases and credit reports.

Your best bet is to obtain as much information as possible directly from the debtor and compare that information to the data you obtain from third-party databases and credit bureau reports.

Improper or sloppy record keeping: Some data is corrupt because names were misspelled, including the debtor’s name, street names, and city names, or other information was entered into a database incorrectly. As they say, “garbage in, garbage out.”

To help separate the accurate information from the erroneous data, look for information that’s inconsistent. For example, check address information in the driver’s license section of a database to see whether your debtor has the same address that’s reported on your own credit application or other records. Keep in mind that some debtors are so transient that they may rack up five or ten different addresses over the span of just a few years.

The accuracy of information you obtain from any source, including the sources mentioned in this chapter, is always a concern. Verification of information is a never-ending process. It’s essential that you listen to any debtor complaints about the information in your files. Part of being a good skip tracer is routinely checking and rechecking information.

No precise formula can be applied that will consistently bring about the desired results: locating debtors and obtaining accurate information about their assets. Skip tracing is a skill you develop over time.

Using public records and directories

Many federal, state, county, and local records are now available online, usually for free and without requiring a password. Finding these sites can take a bit of digging, and some states and counties offer much more than others, but sometimes you’ll find a real goldmine.

Public records may be available through government Web sites or through the old-fashioned means of going to a government office and either searching records yourself or asking a clerk to search them for you.

What different levels of government can provide

Examples of what you may find at the different levels of government include:

Federal Government: You can access federal courts through U.S. Courts.gov (www.uscourts.gov/). You can obtain court records, including bankruptcy records, through Pacer (www.pacer.gov). You can obtain bankruptcy case opinions through the American Bankruptcy Institute (www.abiworld.org), a private, fee-based service. (Turn to Chapter 6 for a more detailed discussion of bankruptcy.)

State Government: The state may be able to provide

• Records of corporations, limited liability companies, and other legal entities

• Driving records (often only available for specific purposes)

• Boat and vehicle registrations (sometimes not accessible by the public)

• Criminal record information (confirmation of whether a debtor is incarcerated, sometimes complete with a debtor’s photo)

• Workers compensation data

• Licensing information for nursing homes and many other types of businesses

• Records such as UCC liens

The National Center for State Courts (www.ncsconline.org) offers links to the Web sites of all state courts.

County Government: The county can provide information on assumed names, real property, licenses, court records (divorce files contain a wealth of information), partnership registrations, records such as some UCC liens, and other vital statistics.

Local Government: Here you can find local court records, including suits and judgments at the local level, plus real estate ownership and property taxpayer information.

What you can find out from public records

Many government agency records are accessible, at all levels of government. For example, defaulted borrowers of student loans can be tracked down through the Department of Health and Human Services (http://defaulteddocs.dhhs.gov). The DHHS provides names of licensed professionals such as doctors and dentists, and whether they’re current on or in default of their student loans. You can also find out what college or university they attended. Public records also help you find out a great deal about businesses, including

UCC filings: Reveal whether other creditors have filed claims against collateral, granting them a security interest and notice to you that you may not touch.

Business and profession licenses: Reveal whether the business or its principals are properly licensed in their field or profession, and may also reveal disciplinary history.

Judgments: Reveal outcome of litigation between parties involving your debtor and the amounts due under any judgments. If you find out that your debtor has several unsatisfied judgments, you may end up standing in line behind these judgment creditors when you try to collect. This knowledge may lead you to determine that litigation is not the optimum strategy.

Active or inactive corporate status: Allows you to determine whether the company is active and therefore viable to collect against.

Annual reports: Tell you the names, and sometimes the residential addresses, of the principals of the corporation.

Real property holdings: Reveal what real estate is listed in the corporate debtor’s name.

Personal property holdings: Reveal motor vehicles, heavy equipment, boats, and all other non-real-estate assets typically licensed with the state.

Using Internet resources

The Internet has made skip tracing a lot easier, putting an enormous quantity of information right at your fingertips. You can search free databases and access commercial services on a subscription or fee-per-use basis right from your computer.

Explore these services to get a sense of what they offer and how they fit your needs. For the fee-based resources, you can usually see the data they offer, how their searches work, and their fee structures before making any purchases.

Free resources

You can find hundreds of general and specialty search engines for use in trying to track down your skips, and more appear every day. The following list notes some of the most popular search engines, along with the ones we’ve found most useful, and they’re free of charge. This isn’t a complete list, so feel free to explore other sites offering this type of information.

General search engines

• Google (www.google.com): The number one search engine. When you can’t find a debtor, use Google to search for his name, address, and phone number.

• Yahoo! (http://search.yahoo.com) and Yahoo! people search (http://people.yahoo.com/): Another well-known search engine, also available as AltaVista (www.altavista.com).

• Bing (www.bing.com): Microsoft’s search engine.

• Ask (www.ask.com): Another popular search engine.

• Kanoodle (www.kanoodle.com): Another search engine that incorporates paid listings (advertisements) into its search results.

People search engines

• SkipEase (www.skipease.com): A search engine for locating people, offering a wide variety of search options.

• Intelius (www.intelius.com): A commercial search engine that provides basic search features for free, with detailed reports available for purchase.

• WhoWhere (www.whowhere.com): A search engine that allows telephone directory searches by name and address. Also offers reverse phone number searches.

Directories

• YellowPages.com (www.yellowpages.com): An online directory in the style of the traditional phone book’s Yellow Pages.

• SuperPages.com (www.superpages.com): Another Yellow Pages-style business directory.

• Business.com (www.business.com): A directory of business Web sites.

• Switchboard (www.switchboard.com): A site that facilitates locating businesses by name, industry, or location.

• World Pages.com (www.worldpages.com): Another phone book.

Specialized information

• Network Solutions (www.networksolutions.com): The site’s WHOIS search facilitates researching the ownership of domain names.

• DomainTools (www.domaintools.com): A commercial service that offers subscribers historic information on domain name registrations and information on other sites owned by a registrant.

• American Registry for Internet Numbers (www.arin.net): A site that allows you to determine who controls an Internet Protocol (IP) number or block of IP numbers.

• Virtual Chase (www.virtualchase.com): A legal research site that indexes a wide range of resources for finding information about public companies (click “Company Information”).

• Securities and Exchange Commission (SEC) (www.sec.gov): The SEC’s EDGAR service includes annual reports and proxies containing information on directors and stock issues of public companies (click “Search for Company Filings”).

• Corporate Information (www.corporateinformation.com): Free reports on public companies, with more detailed reports available for purchase.

Fee-based research sites

The Internet offers many excellent fee-based research sites. The information you can obtain through these sites is extremely valuable for skip tracing. If the information you need appears in a public record, you can probably get it through one of these firms. Note: We’ve included what pricing info we have here, but see the individual sites for price specifics.

Westlaw (www.westlaw.com): Although primarily known for legal research services, Westlaw also provides searches to track people by their addresses and through tons of information gathered from various databases.

Lexis/Nexis (www.lexis.com): Like Westlaw, this company has historically focused on legal research but has added skip-tracing and asset-locating capabilities.

CBC Innovis (www.cbcinnovis.com): This data solutions company gathers information from financial institutions, credit grantors, and utilities in the same manner as the major credit bureaus. However, it often includes different information than you find in a credit report and is normally accurate and current. Reports include all names, addresses, and phone numbers associated with a consumer. Charges include a setup fee and a charge per hit with a minimum fee.

Bessenbacher Commercial Credit Services (www.bessenbacher.com): In existence for 75 years, this family-owned business offers a one-stop-shopping approach to full credit and collection services, including education on credit issues, industry groups to discuss collections and exchange critical credit data (Inet Credit Exchange, www.inetcreditexchange.com), credit consulting, and collections and skip-tracing services for past-due accounts.

Rainmaker Collections (www.rainmakercollections.com): This company provides full skip-tracing and collection services across many industries and throughout many states. The principal, Victoria Targosz, is a popular speaker on skip tracing and related topics at seminars for collections professionals. Fees are contingent.

AVSData (www.avsdata.com): This company provides what it refers to as a comprehensive report that encompasses the background of a consumer, including criminal conviction history, sex offender status, and convictions on county, state, and national levels; plus judgments; liens; bankruptcies; real property transactions; UCC filings; vehicle, boat, and airplane ownership; relatives; and business affiliations. AVS, unlike some of the other services, continues its search for a period of time. The company charges per record or hit.

MicroBilt (www.microbilt.com): This company offers online access to both consumer and commercial credit bureau data with automatic decision-making and collection services. Additional data products include basic person search, criminal convictions, bankruptcy records, liens, judgments, motor vehicles, employment background, and bank history reports. Charges include a one-time compliance setup fee and a price per report with a minimum charge.

Windsearch (www.888windsearch.com): This firm provides collection support and pre-litigation services, plus asset location and skip tracing for attorneys, investigators, and businesses, including judgments, divorce records, child support, estates, and bankruptcy. No fee is charged unless the search produces a hit.

Accurint.com (www.accurint.com): Accurint offers consumer and commercial data including phone numbers, businesses, motor vehicles, licenses, death notices, places of employment, bankruptcies, professional and business licenses, property records, and Dun & Bradstreet reports. The company also offers special search features, such as “people at work,” which connects people with businesses and with past and present employers. Fees are charged per hit.

KnowX (www.knowx.com): The site provides online access to public records databases. This is a reasonably good site for individual and asset research as well as business searches, particularly if you’re looking for the basics at a modest price. Depending on your needs, you can purchase basic information or, for a higher price, more detailed information resulting from many searches. You may also purchase Dun & Bradstreet reports. Fees are charged per hit.

The Work Number (www.theworknumber.com): This is an automated service that includes records on over 100 million employees. It also offers a variety of human resource and payroll services, including employment and income verification. A startup fee and an additional fee per hit are charged.

Onecreditsource.com (www.onecreditsource.com): This site offers important public record information and credit histories (click “Comprehensive Solutions” on the site’s home page). Fees are based on services used.

Credit bureaus

Reports from the big three credit bureaus also serve as skip-tracing tools. For the cost of a credit report, you can obtain significant details about a consumer, including date of birth, current address, last known address, current job, former jobs, credit data, and public record information, such as bankruptcy filings. The big three are

Equifax (www.equifax.com)

Experian (www.experian.com)

TransUnion (www.transunion.com)

Additional methods of obtaining information

Any source of information we discuss in this book can be used for skip tracing. The information you collect in your credit file when making your initial decision to extend credit (see Chapter 3) can be very helpful in later tracking down a delinquent debtor.

When a debtor moves without notice, as we describe in Chapter 5, a postal locator form submitted through the United States Postal Service may help you determine the debtor’s forwarding address or even the physical address behind a postal box if your debtor is a business. The postmaster may ignore a postal locator form when you’re not in litigation and won’t provide an address if it’s deemed to pose a risk to the target’s physical safety. We provide a postal locator form on the CD as Form 5-2.

Under some circumstances, you may be able to subpoena information from the debtor or from a third party, helping you pinpoint a debtor and the debtor’s assets. Subpoenas are usually available when you’re litigating a claim against a debtor or trying to collect a judgment (see Chapter 19 for more info). In addition to issuing a subpoena to the debtor, you may be able to obtain very helpful information by subpoenaing the debtor’s financial institutions and lenders, thereby obtaining credit applications and information about bank accounts and other holdings.

Don’t forget to look for the information that’s already in plain sight: Be sure to review your credit file (credit applications, credit reports, business letterhead, debtor Web site) for information that will help in the skip trace process.

Using your instincts: They’re better than you think

Trust yourself. By combining the resources in this chapter with your basic instinct, you’ll get good results most of the time. Why is your instinct so important? It’s fundamental to figuring out where your debtor may have gone. For example, if Internet sources or credit reports show Florida addresses six months out of the year and northern addresses for the other six months, your instinct may tell you that this person is most likely a snowbird who may be semi-retired but, regardless, will likely be found up north during the summer and in warm climes during the winter.

Using your instinct is not the same as guessing or jumping to conclusions. Pay attention to your gut reactions to information. Listen to what they’re trying to tell you, and follow up to refine and verify information you think may lead to a breakthrough.

Implementing a Plan of Action

Without a doubt, you should limit your skip-tracing activities based on the likelihood of recovering money from a missing debtor. If someone owes you money personally and your chances of recovering it are reasonable, by all means, pull out all the stops and enjoy the chase. But if you’re tracking a commercial entity, you face practical and legal limits to collection, particularly if no one associated with the debt bears personal liability.

In order to use your company’s resources in a practical, orderly, and cost-effective manner to locate debtors and their assets, developing a skip-tracing strategy is imperative.

How to skip trace

Skip tracing doesn’t have a one-size-fits-all formula. Simply put, some people are harder to find than others. But you can benefit from developing a strategy to skip trace for an address or assets of your debtor. Doctors tell you to use the least invasive means first, before resorting to surgery. Skip tracing is similar: Start with the cheapest and easiest tools, and if you’re not successful and the situation justifies the additional investment, progress to the heavy artillery.

A basic strategy to find address information for a debtor includes the following steps:

1. Call the debtor to verify his address.

2. Check to see whether his mail is being returned.

3. Use free Internet resources to assist in verifying an address or locating assets.

4. Contact neighbors/third parties solely to verify an address.

5. Determine whether there’s personal liability for the debt.

• If you find no personal liability and you’ve not yet located the debtor or any assets, or other indicators lead you to believe the business is defunct, consider ending skip tracing.

• If personal liability is a factor but you’ve been unable to locate the debtor or any assets, and other indicators leave you without clues, consider using paid Internet sources, hiring a skip-tracing professional, or scheduling a date three to six months from now to start over (keeping in mind the statute of limitations for the debt).

Considerations to keep in your plan

Consider two basic factors when you’re deciding whether to skip trace a debtor:

Are you likely to recover money?

Does the debtor owe enough money to justify the cost and time investment in skip tracing?

Your plan of action should consider those factors and, based on the likelihood of recovery and the amount owed, direct the scope and budget for your skip-tracing efforts. The business owner who skipped town owing you $50? You probably don’t want to invest much more than a phone call to the business next door or a quick check of her storefront to see whether you can get a forwarding address. But if you’re talking about $50,000 and you think you have a pretty good chance of finding the debtor and getting paid, you can justify an intensive search and the cost of professional assistance.

Help your skip tracer hit the ground running by providing him with all the information you have about your debtor’s identity and possible whereabouts, including all the addresses, Social Security numbers, phone numbers, variations of the debtor’s name (John Smith, John R. Smith, John Ronald Smith), and any business affiliations you’re aware of.

Limit skip tracing where there’s no personal liability

Consider a debtor that is a corporation, where you have no personal guaranties for its debt. Skip tracing the owners of the company is rarely productive. After you’ve verified that a corporation is out of business and has no remaining assets, continuing to try and skip trace the principals of the corporation is rarely worth it.

Unless you believe they made off with business assets, or you and your lawyer have come up with a legal theory that may lead to their personal liability, the addresses, assets, places of employment, and other details of owners, shareholders, officers, and directors of a defunct corporation are worthless to you. When working with incorporated business entities, you need to protect yourself in advance so you can collect the money you’re owed. See Chapter 2 for information on knowing who you’re selling to, and Chapter 15 for information on knowing who you can pursue in court.

If your debtor is a business entity and the principals have no personal liability, don’t run a credit report on the owners of the debtor entity through the credit bureaus such as Experian, TransUnion, and Equifax. When you run a credit report, the name of your company is added to that credit report. This amounts to a black mark on the credit report, lowering the consumer’s credit score. Some business owners have successfully sued creditors for running credit reports against their personal credit when they had no personal liability for the debts of their corporations. Heed this warning even if you obtained authorization to run a credit check on the individual owners of a business as part of its original credit application. After the application process is complete, that authorization is no longer valid. (We discuss credit applications in Chapter 3.)

Even when there’s personal liability: Practical and legal limitations of skip tracing

When a debtor is personally liable, extensive skip tracing and asset locating is often justified. As long as the cost of tracking down the debtor and trying to collect the debt is less than the amount owed, you may be able to turn a profit on the collection.

Whether or not the person you’re chasing is personally liable, going full out to the ends of the earth to track down a valid address isn’t always the best strategy. Consider first, for example, whether the debt is potentially collectible. If the person you’re after is unemployed and has no assets to garnish or attach, pursuit of the debt is probably a waste of time, effort, and money.

Consider the practical and legal limitations on effective collection: If the individual is in another state or country or the amount of the debt is small, skip tracing may not be worth the investment, even if the cost of skip tracing is small. The better course of action may be to write the account off early on in the process, before you throw good money after bad.

Stay on the right side of the law

Compliance with state and federal collection laws, such as the Fair Debt Collection Practices Act (FDCPA), is just as important in skip tracing as it is when you communicate directly with a debtor.

The underlying debt itself must be analyzed to determine whether it’s a business debt or is personal or household in nature. If it’s personal or household in nature, you must comply with the FDCPA (see Chapter 6 for details). As you begin your search, keep the FDCPA and any state law standards firmly in mind.