What is what to do when a check bounces?

When a check bounces, it means the check couldn't be processed because there weren't enough funds in the payer's account. Here's a breakdown of what to do:

• If you are the recipient of the bounced check:

  • Contact the Payer: Your first step should be to contact the person or business that wrote you the check. Politely inform them that the check bounced and ask them to resolve the issue promptly. Give them a reasonable timeframe to provide alternative payment.

  • Understand the Reason: Ask the payer why the check bounced. Common reasons include insufficient funds (NSF), a closed account, or a stop payment order. Understanding the reason may influence your approach.

  • Request Alternative Payment: Ask the payer for an alternative form of payment, such as cash, a money order, a certified check, or an electronic payment.

  • Redeposit the Check (with Caution): You may be able to redeposit the check, but only if the payer assures you that sufficient funds are now available. Be aware that if it bounces again, you could incur additional fees. It's often better to seek an alternative payment method instead. Consider contacting your bank to inquire about their policies and fees regarding redepositing bounced checks.

  • Bank Fees: Your bank will likely charge you a fee for depositing a bounced check. Review your bank's fee schedule to understand the amount.

  • Consider Legal Action (as a Last Resort): If the payer refuses to cooperate or provide alternative payment, you may need to consider legal action, especially for larger amounts. This might involve filing a claim in small claims court. Consult with a legal professional for advice specific to your situation. Before doing so, be sure to document all communication and keep copies of the bounced check and any related paperwork.

• If you are the payer (the one who wrote the check):

  • Contact the Recipient Immediately: As soon as you realize a check you wrote may bounce, contact the recipient to explain the situation and apologize for the inconvenience.

  • Determine the Cause: Figure out why the check bounced. Was it truly insufficient funds, or was there another issue, such as an error in the check details?

  • Make Payment Immediately: Offer an alternative form of payment as soon as possible. This demonstrates good faith and helps maintain a positive relationship with the recipient.

  • Cover the Bounced Check Fee: Be prepared to reimburse the recipient for any bounced check fees they incurred as a result of your bounced check.

  • Address the Underlying Issue: If the bounce was due to insufficient funds, identify the reason for the shortfall and take steps to prevent it from happening again. Consider setting up alerts to notify you when your account balance is low.

  • Be Aware of Legal Consequences: Know that writing bad checks can have legal consequences, especially if done intentionally.

• General Considerations:

  • Documentation: Keep detailed records of all communication, the bounced check itself, and any related fees or costs.

  • State Laws: State laws vary regarding bounced checks, including the penalties and legal recourse available. Research the specific laws in your state.

Here are some links to concepts mentioned above:

• Insufficient Funds
• Bank Fees
• Legal Action