The Deadline for Collecting on a Bad Check
Whether knowingly or in error, people write bad checks. Something as simple as a mathematical error or a mix-up at the bank can cause a check to bounce. In an extreme case, bad checks can sometimes be classified as a serious criminal offense, depending on the circumstances and the objective of the person who wrote the check. The creditor has a limited time to collect the debt that is associated with a bad check, which varies by state.
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Deadline Time Frame
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Although the statute of limitations on debt collection with regards to bad checks varies from state to state, the collection period generally falls between two and three years, according to the Fair Debt Collection website. During this time, a creditor can sue you in civil court to place a judgment against you for the debt. The creditor may decide to report the delinquency caused by the bad check to a credit reporting bureau. If so, your credit report will show a negative notation for seven years, making it difficult for you to obtain any form of financing, including lines of credit or personal loans.
Associated Charges
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If they receive a bad check, business owners or creditors can legally charge you a stated fee for writing the bad check. This fee acts as compensation for the business owner or creditor to recover the penalty suffered from trying to process the back check. A limit is placed on bad check fees that creditors or business owners can charge, and this limit varies from state to state. The fee can be a fixed dollar amount or a percentage of the total amount of debt that is owed.
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Intent of the Check Writer
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People who intentionally write bad checks face serious criminal charges, which will vary by state. Writing a bad check with the intention to defraud a business owner or creditor could result in a prison sentence at least three years. Additionally, you could face criminal penalties of up to $5,000 plus costs incurred by the parties you tried to defraud. If you write a bad check to pay your taxes, the IRS can issue a penalty if the check is returned unpaid from a bank.
Victim's Actions
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If you received a bad check, contact the business or individual immediately to see if you can work out a solution, such as being paid cash. Before you contact the debtor, review the Fair Debt Collections Practices Act to guide you through the legal limits of debt collection. If direct contact doesn't work, consider contacting the business's or individual's bank to see if the company or person has an active checking account. The bank might have a policy of paying bad checks with funds from the next deposit made to the account. If problems persist, consult your attorney immediately. He will be the best source of advice regarding the actions you should take to resolve the issue, based on your state's laws.
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