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Bad Checks, Know Your Options

By: David Brown, Attorney, Weltman, Weinberg & Reis Co., LPA

badcheckXFortunately, most states have enacted statutes which provide recipients of bad checks the ability to recover not only the amount of the original payment, but additional damages to cover the costs of additional fees, lost time, collections and attorneys’ fees. In fact, when it comes to bad checks, six of Weltman, Weinberg & Reis Co., LPA’s (WWR) eight footprint states have enacted statutes, which provide for damages in excess of the original payment amount. Pennsylvania and Kentucky are WWR’s only footprint states that fail to address additional damages.

Here is a list of the states that provide assistance to bad check victims and the options available in each:

Florida: 
Florida Statute § 772.11 provides a cause of action for threefold the actual damages sustained and, in any such action, minimum damages in the amount of $200, reasonable attorney’s fees and court costs in the trial and appellate courts. Before filing an action for damages under this section, the person claiming injury must make a written demand for $200, or the treble damage amount of the person liable for damages under this section. If within 30 days, the person complies with the notice and pays the due amount, then you are obligated to provide them a release and not to institute litigation. Notice should be sent by certified mail in order to prove that you complied with the 30 day notice.

Illinois: 
Illinois 720 ILCS 5/17-1 states that “a person who issues a check or order to a payee in violation of paragraph (B)(1) and who fails to pay the amount of the check or order to the payee within 30 days following . . . written demand both by certified mail and by first class mail to the person’s last known address . . . shall be liable to the payee or a person subrogated to the rights of the payee for, in addition to the amount owing upon such check or order, damages of treble the amount so owing, but in no case less than $100 nor more than $1,500, plus attorney’s fees and court costs.”

Indiana: 
Under Indiana Code § 26-2-7-5, a recipient of a bad check may be able to recover, among other things, the following in addition to the original amount of the check:

  • Interest at the rate of eighteen percent (18%) per annum on the face amount of the check from the date of the check’s execution until payment is made in full.
  • Court costs incurred in prosecuting an action that may be brought by the holder to collect on the check.
  • Reasonable attorney’s fees incurred by the holder if the responsibility for collection is referred to an attorney who is not a salaried employee of the holder. If legal action is filed to effect collection and the collection on the check is referred to an attorney who is not a salaried employee of the holder, the holder of the check is entitled to minimum attorney’s fees of not less than one hundred dollars ($100).
  • All other reasonable costs of collection.

If a person liable under this chapter does not pay to the holder the full amount of the check not more than thirty (30) days after the certified mailing of written notice that the check has not been paid, the person is liable for, and the court shall award judgment for, the following, whichever applies:

  • If the face amount of the check is not greater than two hundred fifty dollars ($250), three (3) times the face amount of the check.
  • If the face amount of the check is greater than two hundred fifty dollars ($250), the face amount of the check plus five hundred dollars ($500). Ind. Code § 26-2-7-6.

Michigan: 
Michigan provides a civil remedy allowing for the recovery of treble damages, provided the injured party follows a two-step process. MCL § 600.2952 provides that upon receiving a bad check, the individual or business must send a letter to the debtor including the specific language from the applicable statute. If the debtor fails to make payment on the check within 30 days, then the creditor is entitled to a judgment for the full amount of the check, plus damages in an amount equal to 2 times the amount of the check, or $100.00, whichever is greater, in addition to costs of $250.00.

New Jersey: 
New Jersey Code § 2A:32A states, “any person who makes any check, draft, or order of withdrawal for the payment of money which is subsequently dishonored for lack of funds or credit to pay, or because the maker does not have an account with the drawee, and who then fails to pay the face amount in cash or by cashier’s or certified check within 35 days after the date a demand for payment of dishonored check notice was mailed by or on behalf of a payee by certified mail to the maker’s last known address, shall be liable to the payee, in addition to the amount owing upon the check, draft or order, for attorneys’ fees, court costs and the costs of mailing the written demand for payment and for damages in an amount equal to $100, or triple the amount for which the check, draft or order is drawn or made, whichever is greater. However, damages recovered under this section shall not exceed by more than $500 the amount of the check, draft or order.”

Ohio: 
Ohio allows for recipients of dishonored checks to file civil suits to recover sums due pursuant to O.R.C. § 2307.61. Additionally, a person damaged by another’s bad check may seek punitive damages equal to three (3) times the amount of the dishonored check.

To establish the offense of passing bad checks, one must show that the debtor:

  1. acted with purpose to defraud,
  2. issued a check
  3. knew that the check would be dishonored.

Though the third element, knowledge, is the most difficult for an injured party to establish, a person who issues a bad check is presumed to know that the check will be dishonored pursuant to O.R.C. § 2913.11(C)(2).

Prior to instituting a civil action for passing bad checks, the damaged party must provide notice to the other party and allow thirty (30) days to cure the delinquency. O.R.C. § 2307.61. If the other party does cover the balance due within that period of time, you may not proceed in a civil action for passing bad checks and may not seek to collect treble damages.

If you or your bank has been the recipient of a bad check, please consider your options.

 


About David Brown

David.BrownDavid Brown practices in Commercial Collections with a focus on the Commercial Banking, Commercial Business, Special Collections and Commercial/Agency Services Groups and is based in the Cleveland office of Weltman, Weinberg & Reis Co., LPA. He earned a B.A. with high honors in Political Science and History from Ohio Northern University in 2004 and a J.D. cum laude from the Cleveland State University, Cleveland-Marshall College of Law in 2007. A member of the Cleveland Metropolitan and Parma Bar Associations, David is licensed in Ohio and is admitted to practice before the U.S. District Court (Northern District of Ohio). He was selected for inclusion in 2012-2015 Ohio Rising Stars

 

David Brown
Attorney
Weltman, Weinberg & Reis Co., LPA
Email: dbrown@weltman.com
Website: http://www.weltman.com/