What if I receive a bad check?

©2000 Michelle Dunn

This question is asked of me by so many people that I decided to write an article about it. Most people get a check for payment of services or merchandise and deposit it into their account and forget it. Then suddenly the check is returned for insufficient funds! Most people don't know what to do when this happens.

When people ask me what should I do with this check, here is what I advise:

Call the customer immediately and tell them what happened, tell them to send or come in and pay with cash or a cashiers check or money order right away. Be sure to add any NSF fees that are allowed by law. Be sure to make a note on their account that you have received a bad check; you may want to only accept cash or money orders for future payments, though, if it's a long-standing customer and this was truly just a mistake, you may not want to do that.

If you do not get an answer and can only leave a message, send out a Demand For Payment notice, and send it by certified mail. On the bottom of the notice make a note that a copy of the notice is being sent by regular mail to ensure delivery. That way if they do not sign for the certified letter, you can be sure they received the notice by regular mail.

In your Demand For Payment notice, state the check number, amount, bank name, and who signed the check. I like to advise them of the penalties by law for writing a bad check. Also let them know of any bank fee that has been added. Give them 14 days to pay you, if they do not pay you within 14 days; let them know you will pursue the collection of the check through the appropriate legal channels.

After the 14 days, depending on where you are located, there are different avenues you can take. In some states you can call the police in the town where the check was written and they will go visit the debtor. In other states you have to file with the courthouse. Some businesses do not want to do these things and will turn the check over to an attorney or collection agency.

The worse thing you can do is just hold the check and wait for the debtor to make good on it. Act immediately! Your chances of recovering will be much better.

Michelle Dunn started and successfully ran M.A.D. Collection Agency for 8 years, and has received wide press with articles appearing in Ladies Home Journal, PC World, and many other magazines and newspapers. Michelle owns and operates www.Credit-and-Collections.com (an online professional collections community for networking and discussions) and Never Dunn Publishing, LLC.

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