What is Skip Tracing in Finance and Accounting?
Skip tracing is the process of locating an individual or entity for various purposes, often related to finance and accounting, like debt collection, asset recovery, or other financial obligations. The term “skip” refers to the person being searched for, who has “skipped out” on their obligations, while “tracing” refers to the act of locating them. Various methods and resources, including databases, online searches, credit reports, job applications, loan applications, and even interviews with neighbors or family members, are used to find the person or entity in question.
Importance of Skip Tracing
- Debt Recovery: One of the most common reasons for skip tracing is to recover unpaid debts. In order to collect a debt, you first need to know where the debtor is.
- Legal Processes: Skip tracing can assist in serving legal documents, like subpoenas or summonses, by locating the individual in question.
- Asset Recovery: It’s used by repossession agencies to recover assets like cars, boats, or heavy machinery from individuals who have defaulted on their loans.
- Fraud Investigation: Skip tracing can help in locating individuals who have committed fraud or other illegal activities, aiding in the legal process.
- Family Reunification: Though not directly related to finance or accounting, skip tracing can be used to find lost relatives or heirs to an estate.
- Efficiency and Cost-Savings: Tracking down debtors or assets more efficiently can save organizations time and money.
Types of Skip Tracing
- Database Searches: Using extensive databases to search for information on the individual or entity.
- Online Research: Utilizing search engines, social media, and other online resources to locate someone.
- Public Records: Looking into government records, which can include anything from vehicle registration to property ownership records.
- Surveillance: Physical observation or tracking of the subject. This is less common and may require a private investigator.
- Interviews: Speaking with people who know the subject, such as friends, family, or neighbors, to collect additional information.
- Credit Reports: These may contain valuable information on a person’s location or spending habits.
Examples of Skip Tracing
- Debt Collection: A credit card company uses skip tracing to locate a cardholder who has defaulted on payments and moved without updating their address.
- Repossession: A car finance company uses skip tracing to find where a defaulted customer has hidden a vehicle to avoid repossession.
- Legal Cases: A law firm uses skip tracing to locate a defendant in a lawsuit who has been evading service of legal documents.
- Bounty Hunting: Skip tracing is also commonly used in bounty hunting to locate individuals who have skipped bail.
Issues and Limitations of Skip Tracing
- Privacy Concerns: The process can sometimes invade people’s privacy, leading to ethical and legal issues.
- Data Accuracy: The information gathered may not always be accurate or up-to-date.
- Cost: Extensive skip tracing can become costly, particularly if it involves surveillance or specialized databases.
- Legal Restrictions: There are laws that govern how certain types of information can be used or accessed, and violating these can result in legal repercussions.
- Time-Consuming: Particularly challenging cases can take a long time to solve, rendering some skip tracing efforts unfruitful.
Skip tracing is a valuable tool in finance and accounting but should be conducted within the bounds of the law and with consideration for ethical implications.