Overview of Returned Checks
Returned checks are checks that the check writer’s bank denies. There are a variety of causes for returned checks, including:
- Not enough money in the account
- A stop payment on the check
- The check is too old to honor
- The check was improperly written
- The order in which banks process transactions
Problems With Writing Returned Checks
If you write returned checks, you’re setting yourself up for trouble. You’ll end up paying a lot in fees, you’ll lose the ability to write checks in the future, you risk legal troubles, and your credit can suffer.
Receiving Returned Checks
If you’ve received returned checks as a merchant, you can still try to collect the money. You should try to contact the check writer and request that they send the funds - it may have been an honest mistake.
If the check writer will not make good on the returned check, you may have to use stronger tactics. Each state has different laws on how to handle returned checks, the penalties, and dollar limits. Contact your bank or your local District Attorney’s office for instructions on how to deal with a returned check.