What actually happens when a check bounces? I’m a small business owner and have received (for the first time) a check that was returned by the Bank, so what do I do now?
First take a look at the back of the check or at the paperwork sent by the bank. When a check is returned it is generally for two different reasons. First, is for insufficient funds ( INF), that is where at the time the check was deposited there was not enough money in the account to cover the check. This happens when folks end up planning on a paycheck being deposited to cover the check, or if someone hasn’t done their math right when balancing their checkbook.
The second reason a check is returned is because the account that the check was written on was closed. If you look at the Bank notes (on the back of the check or in the return letter) you will see which way the problem occurred, INF or Closed.
If it is for INF, you may re-deposit the check (but go to the bank and make sure there are funds in the account). Or, you can contact the person who wrote the check and tell them it has been returned, request that money be replaced with certified funds (bank check or money order).
The person who wrote the check is also responsible for any bank fees AND
IF YOU HAVE A CLEAR NOTICE POSTED AT YOUR BUSINESS INDICATING THERE IS A CHARGE FOR RETURNED CHECKS, YOU CAN GET THAT FEE
With a closed account the only option is to contact the person and request reimbursement. This is why it is so important to get correct personal information on the person who wrote the check.
Now what are your options if the writer of the check ignores your follow-up letter to make the check good. Contact the Bank where the check was written from and get the form to “protest” the check. There generally is a fee to the Bank to have them administratively give you information about the account (the Bank will send out a notice of non-payment to the holder of the account).
Next, you may go to the small claims court/Justice Court or Supreme Court (depending on the amount of the check and your type of business) and sue the person for the value of the check plus any other expenses that you have .
Or contact your sheriff department and file a criminal charge against the person who wrote the check under penal law section 190.05.
This is another reason to make sure you have information about the person who wrote the check, including making sure that someone can identify the person who wrote the check. Anticipate, if you follow this route, it will take sometime to get the matter through court, and for you to receive payment.
As always this is a general answer, to a general question. You should always consult your attorney about the specific issues that surround your specific needs.
If you have a question for Attorney Kukuvka, please forward it to: Cynthia M. Kukuvka, Attorney at Law, 330 E Main St, Palmyra, NY 14522 or cklaw@verizon.net.