Debt Recovery

Collection Lawyer or Collection Agency – Who is Better?

Choosing between a debt collection lawyer and a collection agency can often be confusing.

In simple terms, the decision comes down to how much pressure you want to apply to your debtors.

To illustrate, think of it this way: a collection lawyer wields the biggest hammer when it comes to enforcing payment.

Collection Type	Hammer Size
Written demands of a Collection agency:	🔨
Recovery Calls made by a Collection Agency:	🔨
Court Summons of a Lawyer:	🔨

Using the biggest hammer may be necessary in some cases, but it’s always better to start with the smallest and gradually increase pressure.

This approach helps preserve your reputation and gives the debtor a fair chance to settle the debt. Jumping to the biggest hammer too quickly can anger the debtor, potentially leading to unintended consequences.

Moreover, involving an attorney can increase the risk of facing a counter-lawsuit.

In many situations, the choice is fairly straightforward; in others, it comes down to personal preference and the complexity of the case. Interestingly, many clients use both options, starting with a collection agency and later involving a collection lawyer if needed.

A collection lawyer can be overly aggressive for most debt recovery situations. If preserving the relationship with the debtor isn’t important to you, this approach might still be suitable.

In contrast, a collection agency typically uses a more amicable and structured approach. It starts with polite collection letters, followed by collection calls if necessary. If the debt remains unresolved, the case can escalate to legal action—matching the intensity of a lawyer when needed. However, working with a collection agency offers a better chance of maintaining a positive relationship with your customer or consumer throughout the process.

Let’s briefly understand how both these entities work:

Collection Agencies:

Most Collection Agencies offer these services: Collection Letters, Collection Calls and Legal Collections.

Collection Letters: An agency will send five collection letters on “their own letterhead” asking the debtors to pay. The verbiage on each letter becomes more and more intensive with every passing letter. These letters firmly explain to the debtors the consequences of ignoring their payment requests diplomatically.

This set of 5 letters costs between $10-$20 per account. Payment for Collection Letters is made upfront, regardless the debtor pays or not. If the debtor pays the outstanding debt, you get all that money, and the collection agency does not charge anything extra.

Collection Calls: A debt collector calls the debtor personally and asks him to pay, maybe in installments. The debt collector may even settle the debt for a slightly lower amount with your (creditor) permission. The Agency charges a contingency fee for the Collection Calls service, which means they will only get paid if some amount is collected. If they do not recover anything, nothing is charged. Typically agencies keep 25% to 50% as their commission.

Legal Collections: A lawsuit is filed against the debtor, and the contingency fee is disclosed in advance. Collection Agencies rarely have their in-house lawyers. They transfer your case to one of the local Collection Attorney firms with whom they have a tie-up.

Collection Lawyers:

Unlike the “one size fits all” approach that the Collection Agencies follow, Collection Lawyers take a very different approach. Once they study your case, they will give you a preliminary estimate. Their fees will vary based on how difficult it is to collect the debt. Collection lawyers are usually more expensive than Collection Agencies.

A debt that is harder and more complex to collect will require a higher upfront fee and a lower contingency fee.
Depending on the amount of outstanding debt, they will charge a lower commission on large debts (around 10% on a $50,000 debt), and a higher commission on smaller debts (around 50% for debts around $1000). There will be additional costs like Court Costs, Attorney Suit fees, Per Hour Fees, etc., which vary in each case.
For the older debts (over 1-year-old) , they charge a higher fee as they are harder to collect.

People often engage a Collection Agency first, and they will approach a Collection Lawyer if the debt is still uncollected. Some Lawyers also offer Written Demands services like the Collection Agencies before filing a legal suit for collecting money.

Back to the priceless question, how to select?

1. Is the amount of debt more than $10,000 or Less than $10,000?

Hiring a Collection Attorney for outstanding amounts less than $1000 makes very little sense. For smaller debts, go for a Collection Agency and select their Collection Letters and Collection Calls service. If the amount is still outstanding, ask the Agency to give you an estimate for doing Legal Collections. You can further compare it with Collection Attorneys in your area.

For amounts between $1,000-$10,000, you can go either way. A lot depends on the circumstances of the case and your personal choice. I prefer to go with a Collection Agency for all debts under $10,000.

For an AR of more than $10,000, it is better to go to a Collection Lawyer, provided you are comfortable pursuing a lawsuit against the debtor.

2. Do you want to take legal action against your client?

As mentioned earlier, Collection Agencies offer services that are one size fit all kind of approach. Therefore their costs are lower than Attorneys who take each case individually.

Most debtors take Collection Letters MODERATELY-SERIOUSLY, Collection calls VERY-SERIOUSLY and Legal notices from an attorney MOST-SERIOUSLY. Often a communication sent from an attorney may be all that’s necessary to collect the debt without even proceeding with legal action.

For hard-to-collect accounts with higher balances, you should consider taking legal action directly. But, if you do not want to take the matter to the courts, then it is better to stick with a Collection Agency. Many creditors avoid Collection Attorneys because of the negative image that is associated with using legal action.

3. Do you think your debt is very hard to collect?

For hard-to-collect debt, go with an Attorney. If you are not sure, then stick with a Collection Agency.

4. No Recovery, No Charge

Attorney and Collection Agency both offer a “No Recovery, No Charge” service. If they are unsuccessful in collections, you lose nothing. If you do not want to spend money, this is the way to go. Give preference to a Collection Agency. However, a collection lawyer may ask you to pay for the filing fee, that can be refunded if you get a favorable judgement.

5. Does the Agency/Lawyer have an industry-specific specialty:

Some Collection Agencies and Collection Lawyers specialize in a particular industry. Ex Healthcare, Car Dealers, Tenants, or Student loans. These Collection Agencies and Lawyers should be given serious consideration.

6. Forcing the debtor to pay:

If a debtor has $100K sitting in his bank account, and yet he is not paying up a debt of 10K. Only a court order can force him to clear your bill. This is where a Collection Attorney has a clear advantage over a Collection Agency. Attorneys may further get court orders to garnish the debtor’s wages. A collection agency cannot force a debtor to pay (With Collection Letters and Calls) unless they too go for the Legal option. Filing a lawsuit is the most powerful step to recovering money from debtors.

Most lawyers are affiliated with the Commercial Law League of America (CLLA), the International Association of Commercial Collectors (IACC), or at narca.org.

7. Still want to maintain a good relationship with your patient/debtor?
Diplomatic letters offered by collection agencies are a great way not to break your debtor’s relationship. A lawyer’s letter/call/notice is almost always taken negatively but very seriously.

8. Who collects faster?
The model of a Collection Agency is designed to act fast and in bulk. A collection lawyer will likely act slower than a Collection Agency.

Conclusion:

Since Collection Agencies have a one size fits all approach, they are cheaper. This is also why Agencies can work on such a large number of cases at a time.

Collection Attorneys have a nearly 100% customized approach for your case; hence they are more expensive. Debtors take legal actions much more seriously. Always check their BBB ratings if available (or on bbb.org).

When a Client or Customer Won’t Pay: The Strategic Small Business Guide

You did the work. You delivered the product. You sent the invoice. And then… silence, or excuses.

In small business, an unpaid invoice isn’t just a “late payment”—it’s a Cash Flow Crunch. Whether you’re a B2B consultant or a B2C home service provider, every day that balance sits on your aging report, your profit evaporates.

The secret to recovery isn’t being “the heavy”—it’s Diplomacy. You want your money, but you also want to protect your local reputation and your professional bridges.

Need a Collection Agency for your Business?

Contact us

• Nationwide Coverage • US Citizens-Only Team • High Recovery Rates • Free Bankruptcy screening • Free Credit Bureau reporting • Free skip tracing • 5-star rated • 24×7 Secure Portal • Industry Specific Collectors • Cost-Effective • No Onboarding fee or Minimums

The Psychology of Non-Payment: Why They “Ghost”

Whether it’s a CEO or a homeowner, the reason for silence is usually the same: Embarrassment. * The Business Client: Often stuck in “Decision Paralysis” due to internal budget shifts.

The Individual Customer: Often overwhelmed by personal financial stress.

Nexa acts as your Neutral Mediator. We lower the heat, shifting the conversation from a “confrontation” to a “resolution.” We preserve your brand while we secure your profit.

The Nexa “Dignity-First” Recovery Ladder

We separate “administrative confusion” from “bad debt” to maximize your recovery while protecting your reputation.

Step 1: The Account Reconciliation (Fixed Fee – $15)

Ideal for accounts 60–90 days past due. This is a soft, third-party “nudge” that identifies simple misunderstandings, insurance gaps (for B2C), or internal billing errors (for B2B). You look professional, not desperate—and you keep 100% of the money recovered.

Step 2: Full-Service Mediation (Contingency)

For aged debt or unresponsive people/entities. We perform deep-data scrubs to find the decision-makers and the funds. We use Diplomatic Negotiation to resolve the balance without litigation whenever possible. No Recovery = No Fee.

Small Business Best Practices (B2B & B2C)

The “Stop Work” Policy: If the last invoice is unpaid, don’t start the next phase. Your time is your inventory; don’t give it away.
Friendly Reminders vs. Demands: Your first two internal follow-ups should always frame the issue as a “possible billing error.” This gives the client a “graceful exit” to pay without admitting they were short on cash.
Charge Interest: Your contracts/service agreements should always include a “Late Fee” clause. Even if you waive it later, it provides a powerful negotiating chip.

Why Small Businesses Choose Nexa

The Reputation Shield: One bad review on Google or Yelp can kill a small business. We record and audit all calls to ensure your clients and customers are treated with extreme respect.
FDCPA & HIPAA Ready: We handle the legal “alphabet soup” so you don’t have to. We ensure every B2C interaction is 100% compliant with consumer protection laws.
The “Audit” Reframe: We don’t call as “debt collectors.” We call as your “Account Reconciliation Partners.” This lowers defenses and leads to faster payments.

Frequently Asked Questions (FAQ)

1. Will I lose the client if I send them to Nexa?

Actually, our Step 1 ($15) service often saves the relationship. It identifies the “administrative friction” that was causing the silence, allowing both parties to move forward with a clean slate.

2. Can you collect if there is no written contract?

Yes. For B2C, we can use work orders and signed estimates. For B2B, we can use email chains and “Proof of Work” deliverables to establish the debt.

3. Is my “small balance” worth it?

Yes. Our Step 1 is designed specifically for small amounts. If you have 10 customers owing $100, our system recovers that $1,000 for a fraction of the cost.

Act Fast!

Stop the Leak. Secure Your Cash Flow Today

Statute of Limitations in Debt Collection

Statute of Limitations (SOL) is a time period after which a debt collector loses the right to sue the debtor or take any legal action against him. Statute of limitations laws vary from state to state, for example in California it is 4 years while in Rhode Island it is 10 years.

In most states, it’s between 3 to 6 years. Debts that have passed the statute of limitations are also known as “time-barred debts“.

Q1. If the statutes of limitations have passed, is the debtor free from debt?

No, the debtor still has the moral obligation to pay. The debt has not disappeared just that the debt collector can no longer force a debtor to pay or sue him in court.

Q2. If a debt collector contacts a debtor after the Statute of limitations has passed, has he broken a law?

Not necessarily. Let us look at these scenarios.

– A debt collector may have a wrong “Date of Debt” in his system. It is also possible that the debtor has wrongly calculated it, and the Statute of Limitations has not yet expired. Both parties should clarify this amicably, so there is no confusion. Present the proof if necessary.

– A Debt Collector can still try to collect money by sending a letter and calling over the phone. The debtor can tell the collector that he has no intention to pay. The guidelines on the Statute of Limitations vary by each state (and sometimes cities too), a collection agency must be very careful while trying to collect on these time-barred debts.

Q3. What are the consequences of not paying the debt after the Statute of Limitations have passed?
The debt collector can report the bad debt to the credit bureau reporting agencies like Experian, Transunion and Equifax (if permitted by the state laws). That unpaid debt will appear on the debtor’s credit history for seven years. This will greatly lower the chances of a debtor taking more loans and sometimes even make harder for him to get a good job for many years to come.

But wait, the debtor may be on the hook for paying taxes on the forgiven debt.
There is another consequence of not paying the debt. If the financial institution forgives or writes off a debt over $600, they may send a Form 1099-C to the IRS and a copy to the debtor as well. This only applies to the principal amount, and interests and other fees cannot be added. IRS will ensure that this amount is added to the debtor’s income. There are some exceptions when this is not applicable, like the discharge of debt due to bankruptcy or debtor’s insolvency etc. Since the debtor took the money and did not pay it back, IRS treats this as an income and demands tax on it. If the debtor claims insolvency, then IRS form 982 may apply. The debtor should consult a tax professional to handle this scenario.

Q4. How is the Statute of Limitations date calculated?
First, let’s understand the “Date of Debt” concept. It is the date when the debtor made some activity on that account. It could be the date when the item was purchased, or when the payment was due, or when the last payment was made, or even when the debtor re-agreed to pay the debt (which means the debtor has agreed again to the ownership of the debt). The most recent date is called the “Date of Debt” and the SOL is calculated from that date.

A debtor may have agreed to pay in 4 different ways
a) Oral Contract – Debtor agreed to pay orally (ex: an orally recorded phone message)
b) Written Contract – This could be a signed contract or an invoice. ( ex: A medical bill plus a written agreement)
c) Promissory Note – In this, the details of repayments are spelled out – For example, mortgages or car loans.
d) Open-ended– Here the balance and repayment terms can change- Ex: Credit cards, line of credit etc.

Following are some examples of Statute of Limitations by each state (in the number of years).

State	Oral Contracts	Written Contracts	Promissory Notes	Open-Ended
Alabama	6 years	6 years	6 years	3 years
Alaska	6 years	6 years	6 years	3 years
Arizona	3 years	6 years	6 years	3 years
Arkansas	3 years	5 years	5 years	3 years
California	2 years	4 years	4 years	4 years
Colorado	3 years	6 years	6 years	6 years
Connecticut	3 years	6 years	6 years	6 years
Delaware	3 years	3 years	3 years	4 years
Florida	4 years	5 years	5 years	4 years
Georgia	4 years	6 years	6 years	4 years
Hawaii	6 years	6 years	6 years	6 years
Idaho	4 years	5 years	5 years	4 years
Illinois	5 years	10 years	10 years	5 years
Indiana	6 years	6 years	10 years	6 years
Iowa	5 years	10 years	5 years	5 years
Kansas	3 years	5 years	5 years	3 years
Kentucky	5 years	10 years	15 years	5 years
Louisiana	10 years	10 years	10 years	3 years
Maine	6 years	6 years	6 years	6 years
Maryland	3 years	3 years	6 years	3 years
Massachusetts	6 years	6 years	6 years	6 years
Michigan	6 years	6 years	6 years	6 years
Minnesota	6 years	6 years	6 years	6 years
Mississippi	3 years	3 years	3 years	3 years
Missouri	5 years	10 years	10 years	5 years
Montana	5 years	8 years	8 years	5 years
Nebraska	4 years	5 years	5 years	4 years
Nevada	4 years	6 years	6 years	4 years
New Hampshire	3 years	3 years	6 years	3 years
New Jersey	6 years	6 years	6 years	6 years
New Mexico	4 years	6 years	6 years	4 years
New York	6 years	6 years	6 years	6 years
North Carolina	3 years	3 years	5 years	3 years
North Dakota	6 years	6 years	6 years	6 years
Ohio	6 years	8 years	15 years	6 years
Oklahoma	3 years	5 years	5 years	3 years
Oregon	6 years	6 years	6 years	6 years
Pennsylvania	4 years	4 years	4 years	4 years
Rhode Island	10 years	10 years	10 years	10 years
South Carolina	3 years	3 years	3 years	3 years
South Dakota	6 years	6 years	6 years	6 years
Tennessee	6 years	6 years	6 years	6 years
Texas	4 years	4 years	4 years	4 years
Utah	4 years	6 years	6 years	4 years
Vermont	6 years	6 years	5 years	3 years
Virginia	3 years	5 years	6 years	3 years
Washington	3 years	6 years	6 years	3 years
West Virginia	5 years	10 years	6 years	5 years
Wisconsin	6 years	6 years	10 years	6 years
Wyoming	8 years	10 years	10 years	8 years

A state may alter the Statute of Limitations from time to time therefore do not rely on the table above. Your collection agency should have the most up-to-date information on this. Proof of last activity may be a copy of a check, credit card statement, and other forms of communication that may have happened with the debtor.

Q5. What can Restart the Statute of Limitations?

If a debtor makes even a small payment ( say even $10) after the Statute of Limitations has passed or agrees to make payment under a new arrangement, it can potentially reset the “Date of Debt” again. In other words, the Statute of Limitations will reset and the debt collector can sue the debtor in the near future.

Q6. Can the old debts be removed from the debtor’s credit report once the Statute of Limitations has passed?

It can be removed only if the debt is inaccurate or legally disputable or has been resolved. Statute of Limitations has nothing to do with credit bureau reporting and affects the credit score for 7 years. Medical debts are removed from credit reports when paid.

Q7. Why is there a concept of Statute of Limitations after all?

It’s a kind of fairness doctrine. A debtor cannot be harassed all his life for a debt he could not pay. After all, even a creditor risks if he does not take the full payment immediately. As the debt gets older, circumstances change, documents are lost and important evidence can be misinterpreted. The objective is to encourage diligent collections while evidence is available and fresh. Considering all these factors, the Statute of Limitations came into existence.

Most collection agencies will stop collecting on a debt once the SOL is reached. They just lost the biggest tool ( read it “soft scare tactic”) used to recover unpaid debts.

Are you looking for a collection agency? Get in touch with us by visiting our “Contact us” section.

Video:

How to Choose a Collection Agency: 14-Point Checklist (With Red Flags)

Choosing the right collection agency can lift recovery on aged A/R, protect your online reputation, and keep you compliant. Use this field-tested checklist to compare agencies across price, compliance, data security, and results.

Quick Comparison Table

Criterion	Why it matters	What “good” looks like	Ask this
Industry fit	Workflows vary by vertical	Playbooks for medical, dental, commercial, education, utilities	“Show vertical benchmarks and 2 references like us.”
Pricing model	Misaligned fees cut net recovery	Clear fixed-fee vs contingency; sample invoices; see Pricing & Fees	“Provide fee tiers and an example invoice.”
Compliance	Avoid fines and brand damage	Written FDCPA policies; HIPAA/GLBA where applicable (see Medical / Dental)	“Share policies and training logs.”
Data security	Protect PHI/PII and vendor risk	Documented controls; MFA; encryption; cyber insurance	“Provide attestations and cyber policy limits.”
Skip-tracing	Drives right-party contacts	Multi-source data; documented hit rates; included fees	“What are your hit rates by segment?”
Reputation protection	Tone affects complaints/reviews	Scripted empathy, QA, complaint workflow, call recordings	“Share scripts and QA scorecards.”
Reporting & portal	Visibility = control	Dashboard, notes, cohort analytics, exports	“Show a sample weekly/monthly report.”
Credit reporting	Powerful but regulated	Clear criteria; dispute-friendly; compliant timing	“When do you report and when not?”
Legal escalation	Needed for select cases	Nationwide attorney network; pre-suit success gates	“List pre-suit thresholds and costs.”
Onboarding speed	Faster start = faster cash	List load < 3 days; custom letters/dialer SLAs	“Give me a timeline with owners.”
Service levels	Predictable CX	SLAs for response, dispute TAT, call-recording access	“Include SLAs in the contract.”
Results & benchmarks	Proof over promises	Cohort data by age bucket and balance size	“Share anonymized performance by segment.”
References & reviews	Third-party validation	Industry-matched references and public reviews	“Can I speak with two similar clients?”

14-Point Checklist (Actionable)

1) Industry fit

Choose an agency with proven workflows for your vertical: Medical, Dental, Commercial, Education, Utilities.
Ask this: “Show vertical benchmarks and two references like us.”

2) Pricing clarity: fixed-fee vs contingency

Match fees to account age and balance; avoid hidden add-ons. Compare options on our Pricing & Fees page.
Ask this: “Share fee tiers and a sample invoice.”

3) Compliance program

Verify FDCPA adherence and, where applicable, HIPAA/GLBA safeguards and TCPA-safe communications (see how we handle this in Medical and Dental).
Ask this: “Provide written policies and training cadence.”

4) Data security

Look for documented security controls (MFA, encryption at rest/in transit, least-privilege access) and cyber insurance.
Ask this: “Send attestations and cyber policy limits.”

5) Skip-tracing quality

Better data sources = higher right-party contacts and faster resolution. Relevant for both Commercial and consumer verticals.
Ask this: “What are your hit rates by segment? Is it included in fees?”

6) First-party vs third-party workflows

Early-out brand-safe touches vs firm third-party demands; both should be configurable. See examples within our services overview.
Ask this: “Show cadence and channels (email/SMS/IVR/letters).”

7) Reputation protection

Scripted empathy + QA reduces complaints and protects reviews—critical in Dental and Senior Living.
Ask this: “Share call scripts, QA scores, and complaint process.”

8) Reporting & transparency

Demand a portal with account notes, dashboards, cohort analytics, and exports. For what we report, see our services overview.
Ask this: “Send a sample weekly/monthly report.”

9) Credit-bureau reporting

Use carefully, lawfully, and with consumer-friendly dispute handling. Policy differs by vertical—e.g., Utilities versus Commercial).
Ask this: “When do you report and when is it withheld?”

10) Legal escalation

Seek a nationwide attorney network with pre-suit success gates and transparent costs. This is particularly relevant on older balances in Commercial.
Ask this: “Share thresholds for suit and cost schedule.”

11) Results & benchmarks

Insist on anonymized performance by age bucket (<90, 90–180, >180 days) and balance size—see case patterns across Medical, Dental, and Commercial.
Ask this: “Provide cohort outcomes for accounts like ours.”

12) Onboarding time

Clear milestones: list-load, custom letters, dialer setup, portal training. We outline this in our services overview.
Ask this: “Map the timeline with owners for each step.”

13) Service levels

Contractual SLAs for response, dispute TAT, complaint handling, and call-recording access.
Ask this: “Add SLAs to the MSA/SOW.”

14) References & reviews

Validate with industry-matched references and public reviews; you can also review outcomes by vertical: Medical, Dental, Utilities, Schools.
Ask this: “Can I speak to two similar clients?”

Red Flags to Avoid

No written compliance program or training logs
No security attestations (e.g., SOC 2) or cyber insurance
Complaints about aggressive tactics or sudden review spikes
Opaque pricing, “per-hit” skip fees, or surprise add-ons — compare with our Pricing & Fees
No reporting cadence or portal access
One-size-fits-all approach; no industry references

FAQs

Q: What recovery rates should I expect by account age?
A: Newer accounts (<90 days) recover the most via first-party/fixed-fee. Older balances often perform better on contingency with targeted outreach and (when appropriate) credit reporting or legal options. Explore by vertical: Medical, Dental, Commercial.

Q: How do I choose between fixed-fee and contingency?
A: Use fixed-fee for fresh, lower-balance accounts where reminders work (you keep 100% of payments). Move older/harder debt to contingency with transparent tiers. See examples on Pricing & Fees.

Q: How are patient/customer complaints handled?
A: Ask for the complaint workflow, response-time SLA, sample responses, and how QA audits calls to prevent issues. For sensitivity in senior care, review our guidance for Senior & Assisted Living.

Q: Do I need credit reporting?
A: Not always. It’s powerful but regulated. Your agency should document when it’s used, validate accounts, and handle disputes promptly (see Utilities vs. Commercial).

Q: What legal costs might I incur?
A: Pre-suit demand is typically included. Court filing and process-server fees are usually client-approved pass-throughs. Get costs in writing before escalation. Learn how we approach this in Commercial Collections.

Talk to Us

Want a side-by-side agency comparison tailored to your industry? We’ll map fees, workflows, and expected recovery by age bucket.

Get a comparison → https://nexacollect.com/contact/
See our services → https://nexacollect.com/debt-recovery/

What is Skip Tracing? Find the latest contact information of a person

What is Skip Tracing?

Skip tracing is a specialized service to locate a debtor’s current address, employer, phone number, and financial status. Advanced skip tracing services can reveal further details like assets, spouse information, Social Security Number (SSN), and date of birth. Typically, skip tracing costs between $50 to $175 per lookup, though collection agencies often pay mere cents per search due to their bulk usage.

Why Use a Collection Agency for Skip Tracing?

Hiring a collection agency is significantly cheaper—usually around $15 per account. They provide:

Free skip tracing to locate the debtor.
Multiple demand letters sent to your debtor.
Checks for bankruptcy or deceased status.
Direct payments to your account without extra costs.

Collection agencies achieve lower rates because they subscribe to skip tracing databases in large volumes, dramatically cutting costs.

Caution: Skip tracing can sometimes yield outdated or incorrect data, particularly phone numbers and emails, so use results judiciously.

Who Uses Skip Tracing?

Debt collectors
Private investigators
Bail bondsmen
Process servers
Repossession agents
Journalists

These professionals use skip tracing ethically within legal privacy limits to locate individuals who have “skipped” their obligations.

Common Information Uncovered by Skip Tracing:

Addresses: Current and previous residences.
Phone Numbers: Mobile and landline.
Employment History: Current and past jobs.
Relatives & Associates: Contacts who might provide leads.
Business & Property Records: Ownership details.
Social Media Profiles: Locations, behaviors, and connections.
Vehicle Registrations: Details on owned vehicles.

Importance of Skip Tracing in Debt Collection:

When your debtor’s phone number is inactive or their mail is returned undeliverable, immediate skip tracing is critical. Every day delayed significantly reduces recovery odds:

After 90 days, recovery rates drop below 70%.
After 180 days, recoverability drops to around 50%.

Common Reasons Debtors Are Unreachable:

Changed phone number: Debtors often switch to mobile numbers without informing creditors.
Relocation: Due to job changes, divorce, or retirement, debtors move without updating creditors.
Intentional hiding: Debtors avoiding legal or financial obligations, making them extremely difficult to trace.

Why Let a Collection Agency Handle Skip Tracing?

Using a collection agency saves your business significant time, cost, and stress. Agencies have trained professionals using advanced databases, making their success rate notably higher than in-house efforts. The savings from employee hours and resources far outweigh the minimal cost of agency services.

Additional Insights:

Skip tracing can also uncover if debtors:

Declared bankruptcy
Are deceased
On active military duty
Regularly file lawsuits against collectors (a critical consideration for debt recovery)

Moreover, modern skip tracing includes an automated feature called “triggering,” notifying collectors instantly when new debtor information emerges.

Popular Skip-Tracing Providers:

USPS (basic address checks)
Accurint for Collections by LexisNexis
TransUnion’s TLOxp
Experian’s MetroNet
Equifax’s FirstSearch

Efficient skip tracing significantly increases debt recovery effectiveness, making it indispensable for creditors and collection agencies alike.

Video: What is skip tracing?

Top Excuses Debtors give during Collection Calls

Debtor excuses are the biggest hurdle in debt collection. Sometimes their claims may be genuine, but more often they are simply delay tactics to postpone or avoid making payment altogether.

An aggressive approach will force the debtor to hide things from you, lowering your chances of getting paid. Try to work with the debtor, rather than working against them.

Financial Problems	How to negotiate
• Job Loss. • Divorce. • I am waiting for my customers to pay me first. • Cash flow problem. • Spent money on a medical emergency. • Lost money in gambling. • No money to pay, no special reason. • Medical emergency expenses.	When does he/she expect to be employed again? Is the debtor receiving unemployment benefits? How are their other expenses being met? Understand the debtor’s situation and ask when he expects the situation to improve. Contact the debtor at a later date again. Maybe the debtor is more comfortable paying in installments or settling for a lesser amount.
Delay Tactic	How to negotiate
• Need a copy of the invoice or statement. • Prove me that I actually owe this amount. • Never received an invoice asking me to pay. • Check is in the mail. You will get it soon. • No time for this right now. I have other priorities. • Our accounting department works only 1 hour a day or once a month, please call during that time. Our accounting department sits elsewhere. • No time to go to the bank due to my work schedule.- Changing banks or checkbooks not received yet. • Signatory is not available. • Lost the bill. Can you send the invoice again? • Really, I haven’t paid it yet? Give me time to check my bank statement. • I know nothing about this. • Debtor returns the bill to the sender and tries to become untraceable. • I did not expect my bill to be that high. • Someone else handles my billing ( ok .. ask if they can add that person to this call now?)	Provide information/ documentation if the debtor had requested verification of the debt. This could be resending the invoice or documentation to prove that the debt is actually owed. Even better – fax or email it to them immediately while you have them on the phone. However, most of the time, debt collectors have to actually call the debtor on a later date/time that is convenient for the debtor, and then communicate that he has already been given enough time. An experienced debt collector knows how to work around these delay tactics. Ex: He may ask the debtor to give the check number and date when the check was written. The debtor will usually fumble badly if they are lying.
Dispute or Denial to pay	How to negotiate
• I do not owe anything • I will send you legal notice for harassing me. • Let’s go to the court. • Invoice is disputed. • Never received the goods or service. • Goods were defective, or service provided was bad. • I am being overcharged, or I did not expect my bill to be that high • My insurance company did not cover my entire bill as I thought. • Over my dead body. • Threats: Dude, I have connections; will have someone visit you !!	If the debtor continues to resist and there is adequate proof that the debtor owes the debt, it may be time to check with the attorneys if a legal suit is advisable. However, it is quite possible that the debtor really owns nothing. The data in your systems could be incorrect or outdated.
Other Reasons	How to negotiate
• Statute of limitations • Person you need to talk to is not here right now. • Bankruptcy • Debtor has expired • I have already paid. • Wrong number.	A debt collector needs to get the facts straight and get further information on the case. Take a call if further collection activity is even possible or not.
Possible Genuine Reasons	What to do?
• I am disabled and have no money. • I am an armed service member ( Military, Navy, Air-force, etc.) and am currently posted overseas.	Check with your supervisor if an asset check/search is advisable or not. Most companies will not do this unless the balance is very high. Service Members Civil Relief Act and Fair Debt Collection Practices for Servicemembers Act (HR 5003) give some extra rights to military personnel deployed overseas, ensuring their rights are not violated.

A debt collector should insist on proof or an explanation about what the debtor is saying. The debt collector may even give an option to the debtor to pay the outstanding amount in installments or renegotiate to settle the debt for a slightly lower amount ( provided they have authorization from their client to settle debts for that lower amount).

A Debt Collector should deal with great patience yet sound confident and assertive. Using abusive or unprofessional language is not only illegal; it can also take the debtor to a point where he becomes completely non-cooperative.

It is very important to hire a good Collection Agency which employs top-of-the-line debt collectors, even if they charge slightly more than other agencies. Not every debt collector can make a perfect collections call. They get better and groomed over time.