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.