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What is a 'bad' check, and what happens if you write or cash one?
A bad check is a check that a bank can not properly cash. Bad checks may not seem like a big issue — after all, checks were only used for about 3% of all payments in 2023 — but according to the US Department of the Treasury, check fraud has increased by 385% since the pandemic.
If you receive a bad check, you might be able to ask the issuer for another form of payment or, in some cases, sue them for the money. If you write a bad check, however, the penalties could range from paying multiple bank fees to serving prison time.
Definition of a bad check
A bad check is a check that your bank can't cash, or that requires the bank to reverse the transaction after you cash it. Reasons a check might be bad include:
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It's counterfeit or forged
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There are insufficient funds in the check issuer’s account to cover the transaction
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The issuing account is nonexistent or was closed by the check issuer or bank
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The issuer placed a “stop payment” on the check without a valid reason
In some cases, if you cash a bad check, it will clear. In other words, the transaction will be completed and the money will be deposited into your bank account. But later, when the problem with the check is discovered, the bank may remove the funds from your account and charge you a fee.
Repercussions of writing a bad check
Intentionally writing a bad check is a crime. However, some people accidentally write bad checks, not realizing their account will be short on funds when the check is deposited.
Depending on the circumstances, the repercussions for writing a bad check can include any or all of the following:
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You'll incur a late fee from the company or service provider if your payment doesn't go through on time.
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If you miss a loan or credit card payment, it will damage your credit scores.
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If the check bounces due to lack of funds, you and the recipient can be charged NSF fees.
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You'll likely be charged an overdraft fee if the bank has to cover the transaction and a returned check fee of around $35.
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The recipient can sue you for the money, plus their bank fees and damages.
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The merchant might refuse to accept your checks in the future.
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You may be required to attend counseling or a money management class.
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You can face misdemeanor or felony charges.
While writing an NSF check is usually a civil matter, forging or counterfeiting a check is a serious criminal issue. Depending on the state you live in, you could pay penalties of up to several thousand dollars and/or serve several years in prison if you're convicted of issuing multiple bad checks.
What to do if you receive a bad check
Your options for dealing with a bad check depend on the type of check and the laws where you live. You might be able to recover the damage or pursue criminal penalties if you present the check to your local authorities — either the police department, sheriff’s office, or district attorney’s office. Note that the following types of bad checks don't usually constitute a criminal violation:
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Checks for rent, loan payments, or cash advances
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Checks that are missing information, such as a date or signature
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Post-dated checks or checks you voluntarily waited to deposit
For noncriminal issues, you can still try to recover the damages, but you likely have to send the check issuer a Demand Letter or a Note of Dishonor first. If the check writer responds by sending you the amount due within a set period of time, your claim will be considered resolved without a need for further legal action. If not, you may need to file a small claims case.
Frequently asked questions
What happens if someone writes you a bad check and you deposit it?
If you deposit a bad check, the bank may later withdraw the funds from your account and charge you a non-sufficient funds fee. You could also be charged an overdraft fee if the withdrawal causes your account balance to go into the negative.
What is the difference between a bad check and a bounced check?
A bad check is any kind of check that can't be cashed. A bounced check is a specific type of bad check, one that can't be cashed because there are not sufficient funds in the issuer's account to cover the transaction.
Do you get notified if a check bounces?
Your bank is not required to notify you if you write a check that bounces, but you might be able to set up alerts for specific activity in your bank account.
Will I get in trouble if I cash a check and it bounces?
You won't get in trouble if you cash a check that bounces, but you can end up having problems with your bank. The bank is likely to withdraw the funds from your account and charge you a fee for the reversed transaction.
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