Bad Check Laws, Bad Check Collections: Protect Your Business From NSF Checks

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Bad Check Laws, Bad Check Collections:
Protect Your Business From NSF Checks

Bad Check Laws Explained

Bad check laws are state civil and criminal statutes making it an offense to write checks that are denied because of insufficient funds in the check holder's account. Deliberately issuing these checks constitutes an intent to defraud the recipient. These statutes exist to counteract the negative effects to individuals and businesses.

There can be both civil and criminal penalties for this offense, and fines vary, depending on the state. While the issuer of the check is usually the guilty party, it can also include a person who fraudulently passes one along, or even a third party endorsee who passes the check to another.

As businesses usually accept checks, in addition to other forms of payment, the financial impact of bad checks deemed NSF (non-sufficient funds) cause huge financial losses every year.

Read how cost-effective a check guarantee service can be while eliminating your business' problem with bounced checks

Here's a distinction important to businesses: NSF checks aren't covered under the bad check laws if used to pay for an antecedent debt. Meaning, if a bad check is used to pay an invoice on an account, or make a note payment, it wouldn't be covered under the bad check law. On the other hand, if an NSF check was used to pay for a COD order, then it does.

Also, in most states postdated checks don't fall within bad check laws. According to Section 3-104(2)(b) of the UCC, a check is defined as "a draft drawn on a bank and payable on demand." A postdated check isn't covered, since its not considered "payable on demand."

States vary in how they treat bad checks as to whether they're considered misdemeanors or felonies. The distinction is usually decided by the amount of the check. Research your respective states' laws, as well as what remedies are available if your business is the victim of bad checks. Writing a check while knowing there are insufficient funds to cover it usually constitutes a come in most states, and civil penalties can result.

As mentioned earlier, some states define as a criminal offense only when a bad check is issued to pay for property. Still, in other states, just the knowledge of lack of funds to cover a check or writing a check intending to defraud the other party is deemed a criminal offense.

Learn NSF check laws civil and criminal penalties for your state.

Most states' evidence of intention to defraud exist if: (1) the check wasn't honored by the bank on presentation for payment and (2) the writer of the check didn't pay the check within a certain number of days after written notice informing him/her that the check was dishonored.

Listed below are the number of days by state:

State	Days	State	Days	State	Days	State	Days
Alabama	10	Illinois	30	Montana	10	Rhode Island	10
Alaska	15	Indiana	30	Nebraska	10	So. Carolina	10
Arizona	12	Iowa	30	Nevada	30	So. Dakota	30
Arkansas	15	Kansas	14	New Hampshire	10	Tennessee	10
California	30	Kentucky	10	New Jersey	35	Texas	10
Colorado	15	Louisiana	15	New Mexico	10	Utah	15
Connecticut	30	Maine	10	New York	30	Vermont	30
Delaware	30	Maryland	10	No. Carolina	30	Virginia	30
D. C.	5	Mass.	30	No. Dakota	10	Washington	15
Florida	30	Michigan	7	Ohio	30	West Virginia	10
Georgia	10	Minnesota	30	Oklahoma	5	Wisconsin	30
Hawaii	10	Mississippi	15	Oregon	30	Wyoming	30
Idaho	10	Missouri	30	Pennsylvania	10

If your business is the victim of bad checks, and need bad checks collections services, fill out the quick form below. One of the consultants at DebtCollectionSteps will contact you shortly.

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Bad Check Laws, Bad Check Collections:Protect Your Business From NSF Checks

Bad Check Laws Explained

Bad Check Laws, Bad Check Collections:
Protect Your Business From NSF Checks