Legal How-To: Dealing With Bounced Checks

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By Betty Wang, JD on June 20, 2013 12:09 PM

Do you know how to deal with a bounced check? Everyone is vulnerable to bouncing a check or receiving a bounced check. Sometimes, it's not really anyone's fault and just a matter of circumstance. The point is, it can happen.

When it does, it can often be an embarrassing situation, especially if it's one of your own checks that gets bounced back. But don't fret. In most cases, the issue can be fairly resolved without having to pay too many hefty fines.

Here are some helpful tips in dealing with bounced checks:

If You Bounce a Check

When you bounce a check, this means that a check you've written is returned to either the merchant or the person who tried to cash it. Usually, this is because there is not enough money in your account to complete the transaction.

State laws generally spell out what happens next: Typically, you are liable for paying the merchant and the returned-check fee. This can often be settled informally with the check-receiver by ensuring that the amount is paid in full.

In other cases, the merchant may demand payment from you in writing, for both the bounced check and the fees incurred. Some state laws, like those in Washington state, require banks and/or collection agencies to send you written notice of your bad check. You then typically have around 30 days to pay the merchant, or risk getting sued, the Northwest Justice Project explains.

If You Receive a Bounced Check

If, on the other hand, you received a bad check, you may have to take action to get the money you're owed.

In some cases (for example, transactions between friends), you may want to informally approach the check-writer about the bounced check. It may just be a simple oversight or honest mistake, and if you are properly reimbursed, there is no problem.

However, you can also look to state laws to see what steps you're entitled to take. Some states like California require a formal letter demanding payment, sent via certified mail, as the first step toward a lawsuit (which can seek a penalty of up to three times the amount of the check); laws may also require specific details in your demand letter, like the amount owed and amount of time the person has to pay up.

If you aren't paid in the time allotted or just don't hear back, you can take legal action by suing in small claims court. Typically, this requires your claim to fall under a certain amount, which varies by state.

Need More Help?

Passing a bad check can lead to a blemish on your credit report, or even a criminal conviction in some cases. While lawyers aren't allowed in small claims court, an experienced attorney near you can still help guide you in preparing for your hearing. A lawyer may especially be helpful if you're dealing with someone who fraudulently wrote you a bad check.


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