Dealing With Checks That Bounce

When you are in business you must make the decision whether or not you are going to accept checks in payment for your products or for your service. Checks that bounce cost your business money in more way than one. Before addressing how you can collect on checks that are returned for insufficient funds, it important to stress that this is a case where an ounce of prevention is worth a pound of cure. The most economical way thing for your business to do is to have a check clearing service guarantee checks before they are deposited. You can also opt to use a serviced like PayPal for revenue and this while limiting the ways that you can be paid also protects you from NSF checks.

If you have a check that you have received in payment and it is returned to you, you need to have a plan in place to collect the money.


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The first thing you need to do is to check with your bank and see if the check has been presented twice. If is only one time, then it can be presented again. Before presenting it again it is wise to call the bank from which the check was issued and make sure that there are sufficient funds in the account for the check to clear. There is no point in resubmitting the check if it will just bounce again. While the bank will not tell you the amount in the account, in my experience they have said whether or not the check would clear.

If the check will not clear then you need to draft a letter and send a copy of the check the person or business who gave you the check and let them know what your policy on NSF checks is. When requesting payment, be sure to include and fees that your bank may have charged.  Don’t send the original check, you may need to show that in court if it comes to that.

If you do not receive a response within two weeks then it is imperative to follow up on this. If it is a business a call is in order. You need to be more careful with individuals. A single call, however, is acceptable to find out if there is a reason while they are not making good on their check.

It is illegal to pass bad checks. You need to decide if it is worth it to go to the authorities with this matter. Many businesses have a collections department which will follow a set of steps for collection of the debt. You may have to end up reporting this NSF to a credit agency where it will affect the person’s credit report. If it is a large amount you can also take the issuer to small claims court to get a decision in your favor.

Hopefully, you are not going to have to take all of these steps. If you use these tips you will have a good chance to collect on your NSF. There are always a few checks that are never going to be paid, most of them will need to be written off as a cost of doing business.


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