What Should You Do When the Check Bounces

Every business owner has experienced the sinking feeling when a check has been returned by the bank. A dishonored check represents more than a loss of revenue --- it also represents a breach of trust we placed on the person who presented the check.

Unfortunately, there are few choices when we are holding a dishonored check.

First, the check writer should be contacted using the phone number that was provided. The situation may resolve itself and the writer of the check may have genuinely made a mistake. However, you should not deposit the check again, particularly when you are being charged for the dishonored check by you bank. Insist that the check writer bring in cash, a cashier’s check or a money order for the amount of the check plus the fees charged by your bank.

Second, Illinois law allows the recovery of costs, expenses, interest and attorneys’ fees in a dishonored check situation. This relief is governed by the Illinois Commercial Code.

Third, the recommended course of conduct is to issue a written demand for full payment. Illinois law provides the additional remedy of triple damages as a Deceptive Trade Practice under the Illinois Criminal Code. Whoever refuses to pay the full amount of the check within 30 days from receipt of a written demand by certified mail can be held liable for triple damages, court costs and attorneys’ fees. The Chamber office has available a form demand letter.

A lawsuit can be filed in small claims court and the triple damage provision makes it is economically feasible to pursue small claims.

It is a crime in Illinois to write a check when the account has been closed or there are insufficient funds in the account to cover the check. The matter should be brought to the attention of your local police department, some of whom go out of their way to help local businesses by contacting the check writer and threatening criminal prosecution unless the check is made good. However, it may be time-consuming for business owners to file a criminal complaint to recover on a bad check with a State’s Attorney who is faced with countless bad checks to prosecute.

So don’t despair when a check bounces. Know your rights and pursue your legal remedies. Contact an attorney who is familiar with the laws about collecting bad debts. For a complimentary copy of our brochure, “Small Business Survival Guide” contact George Bellas at 847.823.9030 Ext: 219 or george@bellas-wachowski.com.