Bounced check legal action

Cheque bounce is a serious offence. In case a cheque given to you has bounced, send a letter a demand notice to the party that wrote the cheque the drawerthreatening to initiate proceedings under the Negotiable Instruments Act NI Act if the amount due is not paid. The threat of prosecution usually results in prompt settlement if the drawer is an individual, the proceedings would happen under Section of the NI Act.

In case of a company, its managing director can be personally prosecuted under Section The demand notice must be sent within 30 days from the date you found out that the cheque issued to you bounced.

What to Do If You Get a Bounced Check

Its purpose is to demand payment and inform the issuer that he or she will be prosecuted if payment is not made within 15 days. Get free legal advice today. It should contain the following information: a.

A statement that you presented the cheque within its period of validity. Statement of debt or legally enforceable liability. Information about the reason of dishonour of cheque check the memo of the bank returning the cheque for this.

Calling upon the drawer to pay the amount due. Statement that you are giving the drawer 15 days to pay up or you will initiate legal action. A lawyer is not required to send this notice but you may get it vetted by a lawyer for a few hundred rupees.

The notice often becomes the point of fierce battle when a dispute does reach trial. The proof of service of the notice is very important — you can courier it if pressed for time but also send a copy through registered post or speed post. If not pressed for time, just the speed post is enough. If it is the 15th day and no payment has still been received, you have to file a complaint within 30 days before a magistrate in any of the following places: where the cheque was drawn; where the cheque was presented; where the cheque was returned by the bank; and where the demand notice was served by you.

The dishonour of a cheque due to stopped payment is also covered under Section of the NI Act. You cannot take legal recourse if the cheque was issued as a gift, donation, or any other obligation that is not legally enforceable or if the validity of cheque is over issued more than three months ago. All rights reserved. Copyright Registration Shield Your Trademark. Latest News.

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I understand. You are using an unsupported version of Internet Explorer In order to continue using our website, please upgrade your browser by clicking here. Make a document Start a business Ask a lawyer Solutions Pricing. A bounced check can happen to anyone—in fact, anytime someone writes you a check you could be at risk, and not getting the money is sometimes the least of your problems. Not many people know what to do if they are given a bounced check, and they probably won't find out about it until after depositing it.

Usually it will take a few weeks to find out from your bank that a check bounced. Since it takes the bank a few weeks to tell you that a recently cashed check has bounced, you may have already spent the money, and that means that you are consequently completely responsible for it. This can leave you in the red, allowing the bank to charge you another fee for overdrawing. If you have received a notice of a bad check from your bank, you must first contact the person who gave you the bad check.

It is recommended that you call them and write them a letter detailing the situation at hand. On the phone it is important to remain courteous but firm; you cannot let the person explain away the bounced check. In the letter, or Bad Check Noticeyou must explain how much money is due, when you need the payment by, who wrote the check, and the name of their bank. It is your job to get in touch with the person and sometimes their bank to ensure that he or she receives your notice of a bad check.

This notice can sometimes be hard to write, but must be written in accordance with your particular case.Writing a bad check, even of a small amount, is a crime in all 50 states. Non-sufficient funds' cases, where the check bounces due to lack of money in the account, are prosecuted both as misdemeanor and felony cases every day.

However, to successfully prosecute a bad check a specific process must be followed. Even in check fraud law, the writer is considered innocent until proven guilty and must be given a chance to rectify the situation.

RULE OF LAW: Issue about bounced check

Write a letter to the person who passed you the bad check. Inform him that they need to pay the check in full plus any resulting fees. Give them 7 to 10 days to pay the debt in full. Send the letter certified so you have proof it was received. Write another letter to the check writer if you do not hear back from her.

Cheque Bounce: How are consequences dealt with?

This time, be much more firm. State that you chose to believe it was an accidental bad check, but because they will not cooperate and pay the debt, you are considering this an intentional bad check.

Tell them they must pay you within five days, or you will be going to your local district attorney's office. Send the letter certified mail.

Visit your local district attorney's office if you do not hear back from the debtor. Bring your correspondence with you and a copy of the bad check. He will take the case over, and likely prosecute the check writer.

Alternatively, you could call the district attorney's office but an in-person visit is likely to at least get you a meeting with an assistant who can push your case through more quickly. Contact the local police immediately if you receive a forged, stolen or counterfeit check rather than making any contact with the check writer, as this is usually a felony or even federal crime.

Stephanie Mojica has been a journalist since and currently works as a full-time reporter at the daily newspaper "The Advocate-Messenger" in Kentucky.

Her articles have also appeared in newspapers such as "The Philadelphia Inquirer" and "The Virginian-Pilot," as well as several online publications. She holds a bachelor's degree from Athabasca University. By: Stephanie Mojica. About the Author.Gerry Goldscholle, Esq.

Advertiser Disclosure. We strive to help you make confident law decisions. Finding trusted and reliable legal advice should be easy. This doesn't influence our content. Our opinions are our own. Even though you take all reasonable precautions, a bad check will occasionally slip through your system. A bad check can bounce if the customer has insufficient funds in their account, or if the account has been deleted or closed. There are several solutions that apply primarily to bad checks by individuals including calling the customer, sending a certified letter, or contacting the bank.

Other techniques may be more appropriate when the bounced check comes from another business. Sometimes a customer stops payment on a check, claiming that the goods you sold were defective. If there's a legitimate dispute, the customer's good faith will be a valid defense to a prosecution or a civil lawsuit for multiple damages. And if it turns out that the goods were in fact defective, the customer will be entitled to a reduction of the amount owed or even, in extreme cases, a cancellation of the debt.

But if the customer's allegations are a trumped-up excuse to get something for nothing, you'll be entitled to your full legal remedies in court. Often, however, in dealing with a customer who is unhappy with the merchandise purchased, the best policy is simply to have the customer return the goods and call it a day.

Be careful about accepting and depositing checks that say "Payment in Full" or something similar. If the check writer owes more, you may be barred from collecting the additional amount. Where there's a good faith dispute about how much the check writer owes you, depositing a full-payment check usually means that you accept the check in complete satisfaction of the debt.

bounced check legal action

Crossing out the words "Payment in Full" generally won't help you. You'll still be cut off from suing for the balance. However, a number of states have changed this rule to help creditors.A bounced check is slang for a check that cannot be processed because the account holder has nonsufficient funds NSF available for use.

Banks return, or "bounce", these checks, also known as rubber checksrather than honoring them, and banks charge the check writers NSF fees. Passing bad checks can be illegal, and the crime can range from a misdemeanor to a felony, depending on the amount and whether the activity involved crossing state lines. Many times, bad checks are written inadvertently by people who simply are unaware that their bank balances are too low.

To avoid bouncing checks, some consumers use overdraft protection or attach a line of credit to their checking accounts.

A bounced check may result in fees, restrictions on writing additional checks, and negative impacts to your credit score. Writing too many bounced checks may also prevent you from paying merchants by check in the future.

Many merchants use a verification system called TeleCheck to help them determine if a customer's check is good. When there are insufficient funds in an account, and a bank decides to bounce a check, it charges the account holder an NSF fee. If the bank accepts the check, but it makes the account negative, the bank charges an overdraft OD fee. If the account stays negative, the bank may charge an extended overdraft fee.

Bank fees are just one part of bouncing a check. In many cases, the payee also assesses a charge. For example, if someone writes a check to the grocery store and the check bounces, the grocery store may reserve the right to redeposit the check along with a bounced check fee. In other cases, if a check bounces, the payee reports the issue to debit bureaus such as ChexSystems, which collects financial data on savings and checking accounts.

Negative reports with organizations like ChexSystems can make it hard for consumers to open checking and savings accounts in the future. In some cases, businesses collect a list of customers who have bounced checks, and they ban them from writing checks at that facility again. Consumers can reduce the number of bounced checks they write by tracking their balances more carefully, using an ironclad system of recording every single debit and deposit on a check register as soon as it occurs, or by keeping close tabs on their checking account using online banking.

Consumers can also fund a savings account and link it to their checking account to cover overdrafts. Alternatively, consumers may opt to write fewer checks or use cash for discretionary spending. Checking Accounts. Bad Credit. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Types of Checking Accounts. Checking Account Basics. Opening a Checking Account. Paying With Checks. Using a Debit Card.You just realized that a check has bounced, and you're wondering what happens next.

You might be frustrated or embarrassed, and you might even worry about legal troubles and damage to your credit. But there is some good news: As long as you don't make a habit out of it and you make good on the payment quickly, you're probably not looking at a worst-case-scenario. When there are not enough funds in your checking account to cover the payment written against it, then the check will bounce.

That can happen for several reasons. Perhaps an automatic payment was deducted from your account before you expected it, your employer was slow to deposit your payor money in your account was locked up for a few days after using your debit card.

If you realize that a check is about to bounce, but it hasn't happened yet, you may be able to prevent it from happening. Get money into your account immediately. It can take several days for a check you wrote to hit your account — or longer if your payee is slow to make the deposit. The fastest way to add funds to your account is to deposit cash at a branch. If you deposit checks to your account, your bank may hold those funds for a few days check your fund's availability policy for specifics.

They are probably not interested in punishing you.

bounced check legal action

They just want their money. Being proactive—getting in touch with the merchant or service provider instead of waiting for them to take action—demonstrates that you intend to pay, and that could keep things from getting worse. Ideally, you do this before anybody ever realizes that you wrote a bad check, but it's still worth trying after the check hits your account.

bounced check legal action

If your check bounces after somebody deposits it, it's going to cost you. The recipient gets dinged for depositing bad checks, and they may pass those charges on to you. After a check bounces once, your payee might try to re-deposit the check to see if your account has any money. If not, expect to pay another round of fees. A bad check doesn't necessarily show up on your credit report or lower your credit scoresbut it can.

Several databases track bounced checks including Telecheck or ChexSystems. You might also be unable to find a bank that will let you open a checking account. After too many bad checks, your bank might close your existing checking account.

Those databases are not part of your traditional credit scores—like FICO scoreswhich is the score commonly used for big loans like auto and home loans. But "alternative" credit scores might use that information. If the check was for a loan payment, your credit could quickly get involved. Late and skipped payments will certainly lower your credit scores. That agency will likely report your unpaid debt to the credit bureausresulting in lower credit scores. Collection agencies—or even the merchant that you originally wrote the check to—might also bring legal action, and judgments against you will hurt your credit.

What are the legal consequences of bouncing a check?Please click here if you are not redirected within a few seconds. Toggle navigation Documatica Legal Forms. Glossary and Definitions. Non-sufficient fund cheques, also known as NSF checks, bounced checks, or "bad checks", are a common problem for companies and individuals. There may be a number of reasons, either intentional or unintentional, why a check does not have sufficient funds for its payment.

Some of these reasons may be such things as account closures, temporary holds on funds in the account, bank error, fraud, and a number of other reasons ranging from honest mistakes to criminal activities. In most jurisdictions, the writer of an NSF check will face some consequences. These vary from extra fees levied by the writer's financial institution to various civil and possibly even criminal consequences. There may also be consequences initiated by the intended recipient of the check, such as a demand letter or legal action, or refusal to accept any more checks from the writer.

Merchants may also report the writer to a national database such as TeleChek which helps alert other merchants and banks of bad check writers. This is a legal document which essentially states that the recipient of the bad check is demanding payment of the money owed. It frequently includes the complete contact information of both parties, and may also include details such as the date, number, and amount of the check, and the reason that was given for denial of the check.

If the check writer still does not settle the balance owing, and the recipient wishes to pursue legal action to recover the money, a demand letter can also provide proof in court that the check writer did not attempt to resolve the issue.


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