Check Stop Payments

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 What is a Stop Payment?

A stop payment occurs when an individual gives their bank reasonable notice not to honor a check that they wrote. A check is an order on a third individual, or the bank, to pay a specific sum.

It can also be described as a three-party instrument, with the parties being:

  • A drawer;
  • A drawee or payor bank; and
  • A payee.

There are several different types of checks, including:

  • Government checks or warrants;
  • Cashier’s checks;
  • Teller checks or bank drafts;
  • Certified checks;
  • Traveler’s checks; and
  • Bank money orders and personal money orders.

A government check or warrant is an instrument payable on demand that is drawn by the government or on the government, such as by the Treasurer of the United States. A warrant issued by a governmental agency or by a state or local government is also treated as a check if it is payable on demand.

A cashier’s check is a bill of exchange or a draft drawn by a bank on itself. In many situations, a cashier’s check is purchased by a customer of an issuing bank and is used for a payment when a check signed by an authorized representative of a bank is needed. The individual who is the purchaser is not a party to the cashier’s check unless they are named as a payee or they add their own signature or endorsement to the cashier’s check.

A teller’s check, or bank draft, is a draft drawn check by a bank on another bank or is payable through or at a bank. A similar check is a banker’s check, which is a check with the banker as a drawer, or the duly authorized agent of the bank. This type of check is drawn on funds either at the bank where the individual is an agent or officer or in a corresponding bank where the agent’s bank has credit.

A certified check is a check which is accepted by the bank from which it is drawn. Acceptance of the check may be made by the bank’s signed agreement to pay the check as presented or by writing on the check which indicates that the check is a certified check.

A traveler’s check is a type of check which is intended to provide the instrument with the marketability of cash as well as the safety of a bank draft. This type of check makes it fairly easy to cash when the owner-purchaser is not known to the cashing entity. In addition, the purchaser is protected against loss of the instrument if it has not been countersigned.

A bank money order is a prepaid instrument, similar to a check, which an individual obtains in exchange for cash. They can be used to send other individuals money and the recipient can easily deposit the money order into their bank account.

There are three parties to a money order, including:

  • The remitter, or payor;
  • The payee; and
  • The drawee.

Personal money orders, on the other hand, resemble an ordinary check. A money order is issued with an unfilled blank for:

  • The payee’s name;
  • The date; and
  • The signature of the purchaser.
  • The only item on the money order which is filled out at the time it is issued. This is often completed by check writer impression.

Stopping payment on a check is typically possible at any time prior to the check being cashed. Once the check has been cashed by its recipient, the individual will not be able to make a stop payment with their bank.

In order to stop payment on a check, an individual should take the following steps:

  • Contact the bank as soon as possible; notify them orally that the individual wishes to stop payment on the check;
  • The bank may often request a written statement; if so, issue them a written request as soon as possible; and
  • Make notes in their own accounts regarding the stopped payment.

If necessary, an individual may wish to inform the recipient of the check that they have put a stop on the check payment. If necessary, an individual should consider an alternate form of payment. It is important to note that some checks charge a fee for stopping payments on a check.

How Do I Request a Stop Payment?

The majority of states permit bank customers to make oral stop payment requests. However, an individual’s state may have statutes which require stop payment requests to be made in writing.

If there is a requirement to have a stop payment request in writing and an individual makes their request orally, the law typically requires that the individual make their written request within 14 days of the oral request. This is done in order to prevent their stop payment request from expiring.

A written request to stop a payment is generally valid for 6 months. A stop payment order is another name for a stop payment request and may only be enacted if the check of payment has not yet been processed by the recipient.

May I Stop Payment on a Teller Check?

In general, a check which is drafted by a teller is drawn from accounts which are held by a bank. Since the check is drawn from an account which belongs to the bank, as opposed to the individual’s personal account, a bank is not required to place a stop payment.

What if My Bank Did Not Honor My Stop Payment?

If an individual gives their bank reasonable notice to stop the payment of a check they wrote, their bank is required to honor those instructions. If, despite providing reasonable notice, an individual’s bank pays a check, that bank is responsible for any damages which the individual may have suffered.

Can I Sue a Person Who Placed a Stop Payment on a Check I Tried to Cash?

If an individual has been issued a check and the payment was stopped on that check, the individual may be able to sue for damages. An individual will need to file with the court and they will need to provide evidence regarding both the check and their losses.

In most cases, the individual can sue for the amount of the check in addition to damages. An individual should exercise care whenever they need to stop payment on their own check, as there are legal penalties which may apply to them.

What if I Am Being Sued for Placing a Stop Payment?

If an individual is being sued for ordering a stop payment, they will be required to show that when they stopped payment, they did so in good faith. An example of stopping payment in good faith includes when the individual was not satisfied with a service they received.

If an individual changes their mind regarding the stop payment request, it may be possible to reverse a stop payment on a check. Most banks require the individual to fill out a cancel stop payment request.

Do I Need a Lawyer?

It is essential to have the assistance of a financial attorney for any stop payment issues, questions, or concerns you may have. The regulations regarding stop payments vary by state.

In addition, bank policies regarding stop payments may vary by bank. Your attorney can advise you regarding the local applicable laws as well as advise you regarding your rights and possible remedies.

Although stopping payment on a check may be necessary sometimes, it may also lead to legal consequences. Your attorney can help you file a claim if needed as well as represent you in court.

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