We at Richardson Riley & Associates strive to provide our clients with the highest return on their outstanding accounts receivable whether collection efforts are being performed internally or are outsourced to us. To that end, we provide monthly updates on trends we are seeing in the industry and collection tips that may be helpful. We hope you find our updates topical and of assistance. This month’s topic is:DISHONORED CHECKS
Intentionally passing a bad check is a crime and, unfortunately, is one trend we are seeing from debtors during the current recession. Dishonored checks not only cost businesses in terms of bank fees, but a delay in payments can:
- decrease the likelihood of payment,
- decrease the amount collected
- decrease return due to the time value of money.
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Dishonored check legislation has usually included both a criminal and civil component; however, most states prohibit parties that receive bad checks from pursuing criminal and civil penalties simultaneously. Although the civil component of dishonored check legislation is important, it has been our experience that adding fees to past-due accounts has been ineffective in the collection process. On the other hand, we have found that providing statutory notice of the receipt of a dishonored check (see below) with a reference to the potential criminal penalties has been much more effective in getting recalcitrant debtors to respond, engage, and ultimately make good on the dishonored check(s).
Jurisdiction for a dishonored check is usually the locale where the check was passed.
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Penalties vary widely from state to state and depend largely upon the amount of the check(s). Smaller checks (under approximately $150.00) are generally misdemeanors, while larger checks may be a felony (in the event the check issuer has issued more than one check to the same creditor that has been dishonored, many states will allow accumulation of the amounts of the checks to determine which charge to file).
DISCLAIMER: The preceding is not intended as legal advice, but as a general overview of dishonored check laws based upon our research and experience. The statutes cited or quoted herein were taken from third-party sources and, as such, the accuracy of same cannot be guaranteed or warranted.
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