What to do When You receive a Bad Check

Comments (20)


What to do When You receive a Bad Check

By: Stephen Bucaro

As a small business operator, personal checks may be one method to receive payment for your goods or services. As a way to receive payment, a personal check is actually better than credit cards because the fees are less and there can be no charge back.

Fortunately, most people are honest and studious in taking care of their checking account. But sooner or later every small business operator will receive a bad check. The first thing to do is politely contact the individual and give them an opportunity to make the check good.

Most times you'll find that the customer has simply been careless with their checking account or finances. They will probably be embarrassed about the incident and will immediately replace the check with a good one. Unfortunately, there are rare occasions when the individual who gave you the bad check decides to make themselves scarce.

Note: If a personal check is for more than a few dollars, it's best to let the check clear before delivering the product or service. Say, for example, that someone wants to buy your car with a personal check for twice what the car's worth. Remember, a check is just a piece of paper until after it clears. They can return to pick up the car after the check clears, or you can offer to drive with the individual to their bank to get the cash.

There are three reasons why a personal check may not clear: "insufficient funds", "account closed", or "stop payment". The proper action to take depends upon why the check didn't clear. If the check is returned for "insufficient funds", and you can't locate the individual who wrote the check, file a crime report at your local police station. If a police investigator can locate the individual who passed the bad check, that individual will be required to pay you and/or spend some time behind bars.

If the check was returned "account closed", you may have a criminal case depending upon when the account was closed. If the account was closed before the date the check was written, you definitely have a criminal case. If the account was closed afer the check was written, the court may determine that you didn't present the check for payment in a timely manner. In that case, you have a civil matter, not a criminal complaint.

If the check was returned because of a "stop payment", you have a civil matter. Some people try to save time and work by filing a crime report for ANY check that doesn't clear. This can result in the individual who gave you the check being arrested. They may miss work and encounter a host of other problems as a result of your FALSE crime report.

I said FALSE crime report, because an individual who puts a stop payment order on a check almost always does so because of dissatisfaction with a product or service. The accused individual is now in a position to countersue for the problems caused as a result of your FALSE crime report. This could end up costing you a lot more than the value of the check.

Sooner or later every small business operator will receive a bad check. The first thing to do is politely contact the individual and give them the opportunity to make the check good. If that doesn't work, many people try to save time and work by filing a crime report regardless of why the check didn't clear. It's very important to determine why a check didn't clear before deciding on a course of action.

Disclaimer: Stephen Bucaro is not engaged in rendering medical, legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

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About The Author

Stephen Bucaro


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Comments

Bill P 10.06.2007. 02:31

Why do banks charge the receiver for bounced checks? Why is it that the person who receives a bad check has to pay a bank fee due to "insufficient funds". The person who gave you the check with no funds behind it should have to pay any and all fees. How can this law be changed? People who receive bad checks should not have to be punished for someone else's mistake!

Bill P

Admin 10.06.2007. 02:31

As a bank customer and a bank associate I totally agree that it is an unfair fee that we banks charge. Its bad enough that you couldn't collect on money obviously owed to you and now your charged a fee on top of it.

I want you to know its not a law, its just what banks do. The reason banks charge the fee is because they do have a department that has to process the returned item, mailed the letters to you and make the adjustments on the account and they have to be paid, so since the banks need the departments we need to pay the employees.

That is unfortunately the risk that comes with accepting checks. My advice to all customers is to when possible go to the banks the checks are drawn from and cash them instead of depositing them in your account. This way if the funds are not there their bank can tell you right there and avoid you getting fees.

Or hold the person responsible who wrote the bad check and charge them the fee( like wal-mart does if you write them a bad check.) After all they are the reason you got the fee. But depending who gave you the check that might not work either.

I only accept checks from family and I know they will pay the 5 dollar returned item fee if their check was returned on me, but also my family wouldnt write me a bad check either.

Admin

Alexis 16.01.2013. 16:49

What will happen if i stop paying on a debt that happened due to a scam? I received a bad check unknowingly and it led to a negative bank account, I filed a police report and everything and I have been making on time payments to the debt, if I stop paying what will happen? Or is there a way I can get it written off if I can prove it was a scam? Its with US Bank of that helps?

Alexis

Admin 16.01.2013. 16:49

Your best bet is to talk to the bank about what they need to prove that it was a scam. However, they will probably tell you it was your fault. It really was! You did accept the check and you did cash it. If you can track the check to the person, then you could file charges against them. If you can prove beyond a doubt that the person scammed you, then you can garnish their bank account and/or have them imprisoned. After this happens the bank may forgive you and waive any charges, but don't count on it, because they might tell you that that was covered in the legal proceedings. You are probably going to have to cough up the money and learn from this experience. Other than that it will go on your credit report. If you do track the person down and it is already on your report and you are successful with legal proceedings and present that to the bank, they might have it removed from your report. If you pay it off, they might (might) also then have it removed from your reports.

You are lucky the check didn't dissolve before you got to the bank! Be more careful next time and don't trust anyone you don't know, and only half of half of half of the people you do know and only then after they give you a cash deposit which is twice that of the check!

Admin

tkbrooks1980 31.03.2009. 01:41

The number of bad checks that a bank receives during a 5 hr day is a Poisson random variable with lamda = 2.? What is the probability that the bank receives at least three bad checks during a typical day?

What is the probability that the bank will not receive a bad check during the first two hrs of business?

tkbrooks1980

Admin 31.03.2009. 01:41

The probability of getting k bad checks in that time period with parameter ? is:
P(X = k) = ?^k*e^(-?)/k!

Probability of receiving at least 3 bad checks = P(X?3)
P(X?3) = 1 - P(X?2)
P(X?2) = P(X=0) + P(X=1) + P(X=2)

P(X?3) = 1 - (2^0*e^(-2)/0! + 2^1*e^(-2)/1! + 2*e^(-2)/2!) = 0.323

The parameter ? is modified if you contract or expand your time period.
? =2 in a 5 hour time period means you receive a mean of 2 bad checks every 5 hours.
This translates to 2*2/5 = 0.8 bad checks every two hours.
Calculate the probability with this modified ? parameter:
P(0 bad checks in two hours) = ?^0*e^(-?)/0! = e^(-?) = e^(-0.8) = 0.449

Admin

Danny Mkdicksuk 19.09.2011. 06:16

What can I do if I have received a bad check? My bestfriends boyfriend wrote me a bad check for 100$ and my bank put a 50$ fee on it. I am broke and don't have enough money to buy food this week.
How do I politely convince him to pay me now?

Danny Mkdicksuk

Admin 19.09.2011. 06:16

I can't imagine a bank charging you $50 for a check that came back insufficient funds. Where I worked, that charge was like $3. It makes more sense that you cashed or deposited the check and then used the money, which, when it was "charged-back" -- returned insufficient funds or account closed -- that you were charged NSF/Overdraft fees based on transactions you did after that.

Breakdown: Given that you accepted the check in good faith, you should not be responsible for overdraft/NSF fees resulting from that. Whether that is what happened is beyond my knowledge -- you should talk to someone at the bank to figure that out.

If you accepted a check and cashed it, and it was charged-back to you, then the person who wrote the check (your bestfriend's boyfriend) actually committed theft-of-service-rendered or fraud. Generally, you cannot be penalized for that. Go and speak to someone with some clout at your bank (branch manager, vice-president, officer, etc.) and explain the situation. Many fees are assessed by a computer. It is your responsibility to contest the $50 charge. Even though the bank should not have charged you, the bank doesn't know why it happened unless you tell them. That's a rough guide given what you've said, but it's the best I can do.

A $50 fee on a charged-back $100 check would be a 50% annual interest rate on a "loan" on the uncollected funds. Given that it was not a year, you're talking about a much much bigger interest rate. Like 15,000%. Which, generally, is illegal. The bank can't do that.

Just remember that you accepted the check and deposited or cashed it in good faith. The bank accepted it in good faith. That limits what the bank can charge you, because it's not your fault. They can charge you a nominal fee, but not $50. Any resultant NSF/OD charges are fruit of that same poison apple, so you're not liable for that either. Only by talking with a bank officer can it be determined what you owe, but $50 is too much. How much too much I cannot say.

Anytime you are assessed a penalty -- no matter where it is -- your best bet is to talk to someone with some power about it. It will never hurt you, and oftentimes help you, to present your case and ask for a refund. You can politely ask the bank to issue a refund -- that is easier than politely convincing him to pay. You should, for your sake and the bank's, DEMAND that he pay.

If you say that you have demanded he pay you immediately, it will help your case with the bank officer to refund your fee. All the bank knows is that it gave you money you technically didn't deserve. Until you tell an officer otherwise, they will follow company policy. But, given this particular situation, I would think that they would refund most of that fee because it would be illegal not to, given what you say.

Then you can buy your groceries!

Admin

jsw7077 25.11.2008. 22:33

Is there a statute of limitations in Alabama on a warrant for a bad check? My husband just received a letter from a county in Alabama stating that he had a warrant out for his arrest for a bad check he wrote back in Feb 1995! The letter is dated November 20, 2008.

jsw7077

Admin 25.11.2008. 22:33

There certainly is a statute of limitations on a bad check in alabama! Depending on the amount of the check in question, the statute could be either 3 years (misdemeanor) or 5 years (felony). it is not clear where you live relative to Alabama. Presumably, you live either outside the state of Alabama or outside the jurisdiction of that court.This is where it becomes confusing and problematic to the accused.
A Statute of Limitations is the time that the Legislature allows government (police) to commence criminal action against a defendant. If it is a 3 year Statute of Limitations, this means the prosecutor has 3 years to bring his case,
Unfortunately for you, once an accused leaves the jurisdiction of the court, the Statute of Limitations is said to be "tolled". This means the clock stops ticking. Yes, your husband can certainly be prosecuted for this 13 year old problem!

Admin

Fred J 06.03.2008. 21:14

My daughter received a 2 yr sentence for bad checks How long will she actually serve? She is incarcerated inva Her crime was white collar(writing bad checks). She is taking classes also is a trustee in the kitchen. Of the two yrs received how much will she actually serve. This is in a Va jail.

Fred J

Admin 06.03.2008. 21:14

It depends on if she minds her P's and Q's. Good behavior is almost always rewarded, while trouble while incarcerated almost always leads to either a full sentence, or most charges being piled on top.

Admin

alotaibi1987 27.10.2012. 05:08

What civil actions can I take in Texas after receiving bad checks? I received 2 checks that bounced from a corporation in Houston, Texas. One for $500 & the other for $600. If I file suit in small claims court are there additional damages I can collect on other than the amount of the checks plus court costs?

alotaibi1987

Admin 27.10.2012. 05:08

You could also ask for any fees that you were charged, like bank fees. If you're asking if you can just tack on an extra amount because they pi$$ed you off, you can't.

Admin

Amy Joe 19.05.2008. 23:12

Can I pay for a bad check that I have a warrant for without going to jail? I was just looking on my state's website to see if there was anything on it under my name. And to my surprise there was a warrant issued for my arrest for passing a bad check. Is there a way I can pay for the bad check without going to jail or do I need to call the prosecuter's office? I never received anything about it.

Amy Joe

Admin 19.05.2008. 23:12

Can you contact the company that cashed the check? Perhaps you can make arrangements with them to pay it off and then go before a judge in your area to show that the check has been satisfied. I would consult with an attorney first, though, just to be safe. Good luck!

Admin

Tanya K 27.04.2007. 15:59

Wrote Bad Check, what happens after you find out, you have a warrent out for your arrest? I accidently wrote a bad check to Hyvee for $32 dollars, about a month ago, not going it, than I just received a letter saying, I have a warrent out for my arrest? And a court date in 2 weeks. What is going to happen? I called and told hyvee, I just started my job and would take 2 weeks to get my check, than I called back and said that my empoyer didn't pay me when they were spose to so It would be another week, than this shit happens. I just don't understand what is going to happen. I called the sherrif office, and said can I pay the check, and she said yes, but you still need to come to court, Never been to court b4.

Tanya K

Admin 27.04.2007. 15:59

Usually you will have to pay the amount plus any fees incurred for bouncing the check. Since this is a first offense you may just get that or an additional fine. I would be highly surprised if you spent even a minute in jail. Accidents happen. Good luck.

Admin

Shannon 01.07.2013. 13:10

Can a payday loan company sue me for writing bad checks? About a year ago I took out a $300 payday loan from Hydra Financial I. Due to life circumstances I was unable to repay the loan and had my bank stop all debits from this company. Last week I received a phone call from a company stating that they are representing Hydra Financial and I am being sued for writing bad checks. I asked if I could do anything to avoid going to court and they said I could set up a payment plan but had to make the first payment that day using a credit card not a bank account number. This company had also called several immediate family members and also a friend claiming they were trying to locate me. Is this something that they can actually do or is it a scam?

Shannon

Admin 01.07.2013. 13:10

The can take this to the DA and yes you CAN get done for writing bad checks.............suggest you sort this out before it becomes a criminal offence rather than it just screwing up your credit.

Admin

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