A bounced check means that you promised to pay X amount of money, and when that check was processed at the recipient’s bank, it came back as unable to process due to a lack of funding. Essentially, you didn’t have the cash to cover it, so the check bounces.
Every person involved in the transaction of a bounced check, from the recipient to their bank, to you and your bank, suffers when a check is bounced. So what can you do to fix it if this does end up happening by mistake? What happens if you receive a check from someone and it bounces? Let’s talk about both sides of this.
How Do You Fix a Bounced Check?
In the event that you received a check and it bounced, two things are going to happen: you’re going to get charged for the check bouncing by the bank (unless you have a premiere account or whatever your institution offers), and you’re not going to have access to that money that you were promised.
This is how you proceed if you receive a bounced check:
1. Call the number on the check and contact the check issuer; chances are they made a mistake, or didn’t realize it was going to bounce, and they can fix it.
2. Request a money order, cash, or any other form of money that isn’t a check, and designate a time to either meet with them or a place they can send it (they can even send it through PayPal; as long as you have some record or transaction of them giving it to you).
3. Record everything; if you receive cash and meet up with them, hand them a paper receipt (after taking a picture of it or making a copy for your own records), and be done with it.
4. If they don’t answer the phone, or if they don’t make good on the check, you’re still entitled to that money. Talk to a check recovery service, and they can monitor the bank account of the check issuer, and the second the money is available, they will instantly cash the check for you and place the money in your account (meaning no days of waiting leading up to the check actually cashing and being in your account(.
5. If the above solutions don’t work, you can go to small claims court to reclaim your losses, meaning the cost of bouncing a check, the amount of the check, and in some instances, money lost as a result of the check bouncing. If the check was related to your business, and not having that money interrupts your business, you can file for loss recovery as well (this is specific, but it can happen).
Who Gets in Trouble for a Bounced Check?
The check issuer. If you write a check and it bounces, it’s on you, not on the recipient. When you write a check, you’re promising that amount of money goes to the recipient. In today’s era when we don’t often use checks, it’s easy to disregard that it’s as good as a contract. It’s a sheet of paper with your name, oftentimes your address, phone number, maybe a business entity attached, and it says “I need your full faith that I will give you this money.” When a recipient agrees to take on a check, they’re taking you for your word.
In any case, the check issuer is the only one who can get in trouble for a bounced check. You have to have enough money to cover a check when you write it (it’s always good to have more than enough just in case unforeseen circumstances play out).
What Happens if You Accidentally Bounce a Check?
If you accidentally bounced a check, the recipient needs to be contacted immediately. If you write a check and there’s no ill intent, then convene that to the check recipient. Here is what you can do:
- Arrange to Make an Immediate Payment: If you accidentally bounce a check, you’re in hot water. In order to make it right, go through an alternative form of payment (that you can record; receipts, online transactions, you need proof), and pay the recipient in this way. We cannot stress this enough: have something tangible to show that you paid them, even if it’s cash, you need a receipt with their signature on it so they acknowledge receiving the money. Someone may feel burned or wronged by receiving a bad check and that bad blood may make things difficult, so have that evidence of payment.
- Additionally, Offer to Pay for Damages: Once provided evidence of the bounced check fee, repay the check recipient and cover the cost of whatever the bounced check charged them. Many banks have rather large fees for bounced checks, and of course, you’ll have to pay your own bounded check fees as well, but it’s better than the alternative.
- Maintain Records: Don’t simply think that because the transaction is over you can get rid of receipts and paper trails about the check bouncing, you fixing the issue, and every interaction in between. Keep these records, no matter what, for as long as possible.
Above, we listed a best-case scenario fix, but now let’s talk about what else can happen if you accidentally bounce a check.
The check issuer may contact a local authority, and in the event that the check exceeds $500 (varies on state), you face the potential of being charged with a felony. However, this is contingent on evidence being shown that you did not have the sufficient funds available when you wrote the check.
You should never write a check because money is supposed to end up in your account; you should only ever write checks for money that you already know is there, otherwise you could be charged with a felony.
Be open with communications, reachable, and compliant in fixing the issue if you sent a bad check. At the end of the day, it’s your name on the end of the line, and all eyes are on you. Bad check recipients are in their full right to hire a collection agency to retrieve the funds, go to your bank and request full check payment, and go to local authorities. Depending on which state you’re in, this could be swift and immediate (you send a bad check at breakfast, you’re being approached by a sheriff by lunch).
Do not hesitate to make things right, inspect where things went wrong, and ensure that the recipient is aware of what’s going on at all times if you want to get this out of the way.
How Do I Get My Money Back From a Bounced Check?
While going through the process of getting the funds in your account and receiving what you are owed, in the event that you are the one who received a bad check, there are a couple of things that you can do:
- Visit the Issuer’s Bank: If you go to the bank of the person who issued the check, it means business. That bank may either honor the check, return the fee to you that you received from the check bouncing (if you can provide tangible proof), or they may do nothing. That’s right – they may just say that it’s not their concern.
- Hire a Collection Agency: At the end of the day, it isn’t the bank’s fault, it’s the fault of the issuer. If the issuer can’t be found, isn’t returning calls, and isn’t making the situation right, then you can enlist the assistance of a collection agency. A check is used for goods purchased or services rendered, so you can normally provide proof that you are owed that money, and then go after the individual to get back what’s yours.
- Contact Local Government: This is absolutely an extreme take, but if the situation calls for it, you may go to the District Attorney about receiving a bad check. It’s always best to resolve this in a more simple way, such as contacting the check issuer first and seeing if there was a mistake. It’s going to be less painful to receive the money in a different way and receive an apology from the issuer rather than go through this process, but it may be necessary if you’re dealing with someone who just doesn’t care to make things right.
Avoid Bouncing Checks in the Future
Checks are becoming an obsolete sector of banking. The best thing you can do right now is phase out using checks from everything you do in banking. These are headaches you simply don’t run into when you use a debit card, and the transaction is still recorded, so there’s no reason to stick with checks.
Bounced checks have a big presence on our post about the 7 reasons why you might be denied a new checking account; do yourself a favor and begin to take them out of your banking vocabulary. There are no downsides to doing this.
Source: crediful.com