Fair Debt Collection
(see cancelled checks below)
First, we need to be clear on the difference between a “bad check” and a check written with the “intent to defraud”. In simple terms, a bad check is usually the result of poor math calculations or your bank making a miscalculation. In either case, your intentions were good when you wrote the check. You thought you had enough money to cover the check and can show where the mistake was made thus proving your good intentions. Crooks, on the other hand, write bad checks with the intention of ripping people off. Writing checks when you know you do not have the money to cover them is a serious crime that, if caught, can land you in jail or even prison.
Make no mistake about it, writing bad checks is always illegal. However, just about every state has a statute of limitations (SoL) on the collection of bad checks; typically 2 or 3 years. If you receive a collection notice or call about a bad check, don’t panic! First, check to see if the Statute of Limitations has expired.
Next, decide whether you want (or can afford) to pay the debt. If you plan to pay the debt, be sure that you are only paying what state law allows. Check your state law to determine what fee(s) (if any) collectors can add to the face value of the check. Many states limit collection fees to a certain amount such as $100 or to a percentage of the face value of the check and prohibit interest charges.
The FDCPA, section 15 USC 1692f, makes it an unfair practice to collect “any amount (including any interest, fee, charge or expense . . .) unless such an amount is expressly authorized by the agreement creating the debt or permitted by State law.” Debt collectors may attempt to collect a fee or charge in addition to the debt if either:
(A) the charge is expressly provided for in the contract creating the debt and the charge is not prohibited by state law, or
(B) the contract is silent but the charge is otherwise expressly permitted by state law.
Conversely, debt collectors may not collect an additional amount if either:
(A) state law expressly prohibits collection of the amount or;
(B) the contract does not provide for collection of the amount and state law is silent.
NOTE: If state law permits collection of reasonable fees, the reasonableness (and consequential legality) of these fees is determined by state law. So, unpaid debts sent to collection agencies, whether closed or charged off MAY still accrue charges and fees IF the credit contract allows it and State law does not prohibit it. Many states do limit the amount that can be charged and, if the State does have a law, it overrules the credit contract.
What are the rules for stopping payment on checks?
When you write a check, it’s like writing a promissory note that says the funds are available and when the instrument (in this case a check) is presented to your bank, funds will be withdrawn from your account to cover the amount of the check. When this happens, the debt is, in effect cancelled, thus the term “cancelled check”.
However, the same term can also be used when you cancel a check. For instance, after sending a check, you change your mind, you can ask your bank to cancel (stop payment) on the check. This means the bank will not honor the check if presented. Banks usually charge a fee for this service.
According to the Uniform Commercial Code Section 4-403(a), an oral stop payment order is binding on the bank for 14 calendar days. Section 4-403(b) says that if you confirm the stop payment order in writing within the fourteen days, the order is binding for 6 months and may be renewed in writing for another 6 months.
Pre-authorized transfers: Up to 3 business days before the transfer is scheduled to occur, the consumer can stop payment by notifying the bank orally or in writing.
If a debt collector is collecting a bad check debt which is past the statute of limitations, or you believe you are a victim of illegal or unfair debt collection practices, submit your information for a FREE Fair Debt Case Review, or call toll free 888-FDCPA-LAW (888-332-7252). The debt collector may just be liable to you for statutory damages of up to $1,000, plus any actual damages suffered, plus attorney fees!
State Allowed NSF Fees
For check payments that are returned for lack of funds, the below amounts reference the maximum a merchant can charge for recovery by State.
Recovery costs are paid by the check writer. Check writers agree to pay these check recovery fees when check payments are accepted by merchants who have appropriately provided notice of such fees (at the point-of-sale, in the language of any agreement, or electronically)
- Alabama – $30
- Alaska – $30
- Arizona – $25
- Arkansas – $30
- California – $25
- Colorado – $20
- Connecticut – $20
- Delaware – $40
- District of Columbia – $25
- Florida – $25
- Georgia – $30
- Hawaii – $30
- Idaho – $20
- Illinois – $25
- Indiana – $20
- Iowa – $30
- Kansas – $30
- Kentucky – $50
- Louisiana – $25
- Maine – $25
- Maryland – $35
- Massachusetts – $25
- Michigan – $25
- Minnesota – $30
- Mississippi – $40
- Missouri – $25
- Montana – $30
- Nebraska – $35
- Nevada – $25
- New Hampshire – $25
- New Jersey – $30
- New Mexico – $30
- New York – $20
- North Carolina – $25
- North Dakota – $40
- Ohio – $30
- Oklahoma – $25
- Oregon – $35
- Pennsylvania – $30
- Puerto Rico – $10
- Rhode Island – $25
- South Carolina – $30
- South Dakota – $40
- Tennessee – $30
- Texas – $30
- Utah – $20
- Vermont – $25
- Virginia – $50
- Washington – $30
- West Virginia – $25
- Wisconsin – $25
- Wyoming – $30
* This information should be independently verified by merchants to coincide with the laws and statutes governing each respective state.