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Burned by a bad check? Fight back

Talk about adding insult to injury. If you deposit a bad check into your bank account, you've lost that money, plus there's a good chance the bank or credit union will whack you with a fee -- maybe $15, $25 or more.

Why? Because you're in the best position to determine if the person you accepted the check from is a good risk, says John Hall, spokesman for American Bankers Association.

"The bank has never met this person and has no relationship with them. You are liable because you decided to accept a check from this person."

With an increasing number of consumers selling personal items or services to other individuals, it's certain that more and more people will find themselves stuck with an occasional bad check. Businesses generally have more clout and financial wherewithal to deal with bad checks; for consumers, it can be a much more trying experience.

Not only will you be stuck with the bounced check and possibly a "deposit item returned" fee; your bank might charge you with nonsufficient-funds fees if any checks you wrote bounced because you didn't have as much money in your account as you thought.

If accepting bounced checks isn't a habit, you should explain the situation to your bank and see if they'll waive the fees. But the main job ahead of you is recovering the money owed to you by the bad-check writer.

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Your options
The first thing to do is call the check writer and ask that they come up with the money. It may have been an innocent mistake that can be made right with an apology and a payment.

If that's not the case, then check with your state attorney general's office because bad-check law varies from state to state, and you may find that you have options other than small claims court.

Most states require that you send the check writer a certified letter. Ask that the money be paid by money order or certified check. You can also request to be reimbursed for the bad-check charge imposed by your bank. Some states require the check writer to respond within 10 days; others allow 30 days.

If the check writer doesn't respond or refuses to pay, you can go to small claims court. The clerk's office will give you instructions for how to proceed. You'll need to bring evidence -- the original bounced check, a copy of the certified letter you sent to the check writer, any responses you received from the check writer and a bank statement that shows a fee for depositing a rubber check.

Small claims courts generally limit losses to up to $2,500 or $3,000, but some go as high as $5,000. The clerk's office can tell you what damages you can recover in addition to the original amount of the bounced check plus court fees. In some states you can sue the person for up to three times the amount of the check. You're also entitled to interest if the debt is paid over time.

But suing someone and actually getting your money back are two different things, says Lynn Goldberg, vice president of New York-based National Credit Systems.

"Suing someone is a real quagmire. You can go through the justice system, sue, get your day in court and win a judgment. The problem is the judgment is nothing more than a piece of paper. There's always the problem of getting the money. An individual executing a judgment, well, it's something the average person just doesn't know how to do."

Don't be discouraged; a lot of defendants pay up when the judgment is made. But if the culprit doesn't pay within a stipulated time, usually 20 to 30 days, you can go back to court and try another avenue such as wage garnishment or a lien against property. Judgments are usually good for about 10 years and can be renewed, so you have a long time to recover the money.

Keep in mind, the defendant has the right to appeal and doesn't have to pay anything during the appeal process.

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-- Posted: Oct. 4, 2005





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