If you write a check and you do not have enough money in your
account to cover the amount of the check when it is presented for
payment, the check is considered a non-sufficient funds (NSF) check.
This may happen inadvertently if, for example, you fully expected
a paycheck to be deposited to your checking account on a certain
date and it was not. This caused the check to "bounce," or be returned
as unpaid. Some creditors will present the check a second time
to see if the problem was an error in timing. However, usually
there is a charge from your bank for an NSF check and may also
be a charge from the creditor to whom you wrote the check. Thus,
NSF checks can be costly.
Penalties for passing an NSF check.
There are codes of law governing the penalty for passing bad checks.
Upon being notified that there were not sufficient funds to cover
the check, a person has 30 days to pay the full amount of the check
to the holder. If the check is not paid, Indiana Code (IC 26-2-7-6)
states that the person is liable for whichever applies:
If the face amount of the check is not greater than $250, three
times the face amount of the check.
If the face amount of the check is greater than $250, the face
amount of the check plus $500.
If a court judgement is awarded there may also be court costs
and attorney's fees for collection.
Ways to avoid NSF checks.
It is a good idea to know the balance of your account before
writing a check.
Remember to keep your checkbook record current by entering
all deposits and withdrawals including cash withdrawals and checks
written on the account.
If you have a joint account, it is important for all parties
to coordinate their check-writing.
The above information should be understood to be a general
discussion of the subject matter and DOES NOT constitute
a legal opinion about the situation. For further information
please consult a qualified attorney.
