Dishonoring of Checks

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 What Is A Check?

A check is an instrument or type of payment that can be used to pay for goods and services. Checks are issued by banks for account holders to use as an alternative to paying cash.

The person issuing a check is called a drawer, while the one receiving a check is known as a drawee or payee.

When is a Check Dishonored?

A dishonored check is a check that has been presented to a bank for deposit or for cash, but the bank refuses to accept or honor the check. A check can be dishonored for a variety of reasons.

For example, a bank can dishonor a check due to insufficient funds in the account, or if there’s evidence that the signature has been forged or altered. Additionally, a bank can refuse a check if the account has been closed by an owner of the account or closed by the bank.

If you’ve been notified that a check you wrote or deposited was dishonored, it’s important to contact the bank since you could incur fees and costs associated with a check that has not been honored.

There may also be additional penalties such as collections, and potential legal action from the bank or law enforcement.

What Is A Stop Payment?

A stop payment is a request you make through your bank to stop the payment of a check you issued to a person or a business. The process entails contacting your bank and requesting that they attempt to essentially cancel the check so it is not honored when presented for processing.

It’s worth noting that stopping payment on a check doesn’t guarantee that the funds won’t be withdrawn from your account. A bank will do it’s best to try and stop the payment, but if the check gets cashed or is deposited before your stop payment order goes through, the check may still be honored.

If your stop payment was unsuccessful and the check was processed, a bank will typically not refund the stop payment fee even though your account was debited the amount the check was written for.

Know Your Responsibilities When Accepting Checks As Payment

When dealing with customers who pay by check, it’s important to make sure the person presenting, issuing, or signing the check is authorized to use the account from which the funds will be drawn from.

If an unauthorized person gives you a check, the true account holder could request a stop payment of the check. If the stop payment is successful and the funds are not deposited into your account, it will be up to you to collect the lost funds from the person who gave you the check.

If you deposit a customer’s check into your checking account without verifying the available funds, or if you accept a post-dated check, then you may be at risk of not getting paid. You should also look closely at the check and ensure it hasn’t been altered in any way and that you don’t notice any abnormalities such as:

  • The check is post-dated or dated beyond 90 days
  • The date has been altered
  • The font looks different to how it normally would or is larger than normal
  • The check number seems out of sequence
  • There are smears, blurs or other marks on the paper itself which make it difficult to read what’s printed on it
  • The check looks like it was copied or made with a color printer

Check with the bank that’s listed on the check if you’re unsure about a check that’s presented to you for payment. When it comes to accepting checks from customers, it’s always better to play it safe and avoid the headache of dealing with trying to recoup your losses or suing someone to collect the amount you are out.

What Are The Penalties Of Writing A Dishonored Check?

When someone writes a check that has been dishonored, depending on the circumstances and the criminal intent, they can be charged with the crime of issuing a bad check. This is a criminal offense that can lead to imprisonment, fines, and other penalties as well as a criminal record.

Depending on the amount of the check, a person who knowingly writes a back check could be charged with a felony. In many states, bad check writers can be charged with forgery, which is also a felony.

Additionally, a court might order you to pay restitution to the person or business who received the bad check. This means that you would have to reimburse them for any money that they lost as a result of your actions.

Check fraud is another term that’s used to refer to crimes related to dishonored checks. This can include things like forging a signature on a check, altering the amount that’s written on it, or cashing a check that’s been reported as lost or stolen.

Sometimes checks are dishonored due to an innocent mistake such as writing the incorrect amount on a check. For example, you could write $1,000 instead of $100. Another reason for dishonoring a check due to a mistake is perhaps you signed your name slightly different from the signature the bank has on file.

A common reason why a check may be dishonored is due to Non-sufficient Funds (NSF) in your account to cover the transaction due to a mistake or oversight in your checking account. Even if your check was dishonored due to a simple mistake, you may still be charged a fee by your bank.

Some banks may consider closing your bank account if you cause your account to go into the negative due to an NSF or other reason – mistake or otherwise. Once a bank closes your account due to excessive NSF’s or a negative balance, it may make it difficult to open another checking account later.

Here are 7 steps to help to avoid making mistakes when writing a check:

  1. Double-check the name of the payee on the check
  2. Only write out checks when you know you have available funds
  3. Sign the check with your normal signature
  4. Make sure the check is from a current account and not one that has been closed
  5. Correctly spell out the amount of the check on the appropriate line
  6. Take the time to balance your checkbook after each transaction
  7. Don’t forget to deduct for recurring or automatic charges

Do I Need An Attorney For A Dishonored Check?

It’s important to speak with a criminal defense lawyer if you’ve been charged with a crime such as writing bad or dishonored checks. In some cases, the criminal charges for writing a dishonored check can be quite severe. An attorney can discuss the potential consequences and can help you determine the best course of action and help defend your rights in court.

In addition, a criminal attorney can also defend you against any civil litigation in the event that a bank sues you for monetary losses due to dishonored checks that were issued by you.

On the other hand, if you’ve received a bad check that was dishonored by your bank and you would like to recover your losses, you may consider contacting a financial attorney to help you collect funds from the person who issued you the check.

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