Why You Shouldn’t Write Checks You Can’t Cover

Why You Shouldn’t Write Checks You Can’t Cover

By |October 25th, 2013|

bad check problems in californiaShort on funds? If you’re in California, don’t write a check unless you know you can cash it.

You’ve got $11 left in your checking account and the cash register at the grocery store in Los Angeles shows a balance due of $108.14.

There’s not much you can pull off the conveyor belt.

There’s no available credit on your cards. The car needs gas.

Payday is next week.

So you pull out your checkbook, cross your fingers and write a check.

Bad move.  Even worse under California law.

Your Bank Won’t Be Happy

If you write a check that you can’t cover, your bank may pay the check and issue an overdraft fee. If you’re not so lucky, the bank will dishonor the check and send it back to the store you made your purchase from.

If the bank decides to return the check, you’ll get a letter from the store demanding immediate payment. The store might also demand a fee for the bounced check. If you fail to pay within a specified time, usually seven days, the merchant can sue you. If that happens, you might end up having to pay two or three times the amount of the check, as well as other fees.

Even worse, if this happens more than a couple of times, the bank may choose to close your account. Since accounts that are closed “for cause” are reported to ChexSystems, this can make it incredibly difficult to open another account elsewhere.

In California, A Bad Check Can Mean Criminal Charges

Under California law, writing a bad check may be a crime under Penal Code 476a. Charges may be filed either as a misdemeanor or a felony – it depends on the prosecutor’s choice.

If it’s filed as a misdemeanor, you could be looking at up to one year in a county jail and a maximum fine of $1,000.  If you’re convicted as a felony then you could get up to three years in jail and a maximum fine of $10,000.

There are possible civil penalties as well. The payee (that’s the person or company that you wrote the check to) can sue you for the amount of the check in addition to damages of up to $1,500.

Here’s a good recap of Penal Code 476a.

Can Bankruptcy Help?

If you’ve bounced a check, filing for bankruptcy may allow you to wipe out the fees and amounts due. The vendor may have a good reason to file a complaint with the bankruptcy court to keep you from discharging the debt, but that’s something we can talk about before filing a bankruptcy case for you.

If you’ve been prosecuted under the California bad check law, a bankruptcy won’t wipe out the fines. A Chapter 13, however, may be a good way for you to repay the fines and penalties over time.

The civil penalties, however, may be able to be wiped out in bankruptcy. Again, the vendor may be able to fight your ability to discharge the debt so you’ll want to have your lawyer assess the risk in advance of filing.

See Also:

Don’t Write A Bad Check In California

If you’re short on cash, writing a check you can’t cover may be a tempting solution.

But it’s not a solution. It’s an invitation to bigger problems.

Don’t do it.

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About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.