Often, individuals encounter a frustrating scenario where they receive checks but face disappointment when attempting to cash them at the bank, as these checks end up bouncing. This can be disheartening because it feels like the rewards of their hard work are slipping away. Such a practice should be discouraged.
To address this issue, people often seek the assistance of debt collection services through a debt collection agency.
But what exactly is a bounced check?
A bounced check is one that the bank rejects for various reasons, leading to its return to the person who initially submitted it. When a check is rejected, the bank issues a Cheque Return Memo, explaining the primary reason for the rejection.
Unfortunately, a bounced check cannot be processed.
One common reason for a check to bounce is insufficient funds in the account. Sometimes, individuals write checks for amounts exceeding the available balance in their accounts. When these individuals attempt to withdraw the specified amount from the bank, the check bounces due to insufficient funds. In such cases, the bank refuses to honor these checks and returns them. It’s important to note that banks often charge NSF (Non-Sufficient Funds) fees when rejecting checks due to insufficient funds.
Bounced Cheques and Their Consequences
Bounced cheques fall into the realm of criminal offenses, leading to punitive measures.
Causes of Cheque Bouncing
Understanding the reasons behind cheque bounce is essential. Here are some common factors:
1. Inadequate Funds:
When the payee’s account lacks sufficient funds, the bank will not honor the cheque, resulting in a bounce. This means the recipient will not receive the specified amount, and the issuer may incur an NSF fee.
2. Delayed Deposits:
Many individuals procrastinate when depositing their cheques, often exceeding the cashing date. Attempting to cash the cheque after its due date leads to a bounced cheque, necessitating the issuance of a new one.
3. Signature Discrepancies:
Ensuring consistency in the signature is crucial when signing a cheque. A mismatch in signatures between the cheque and the issuer’s usual signature can result in a bounced cheque. This discrepancy raises security concerns, as allowing mismatched signatures would create opportunities for potential fraud and security breaches.
It is essential for the person signing the cheque to ensure that they use the same signature as they do on all their other cheques. When the signatures on the cheque do not match, the cheque will be returned, leading to security concerns. This is because if banks were to honor cheques with mismatched signatures, it could result in numerous security issues and potential misuse of signatures.
Ensuring consistent signatures is imperative when dealing with cheques.
The amount written in words must correspond exactly to the numerical amount written on the cheque. If these two amounts do not align, the cheque will not be processed and will be returned.
Cheque Alterations and Bouncing Consequences
Many issues can arise with cheques, often leading to cheque bouncing. Common problems include overwriting or scribbling on the cheques, which, when presented at the bank, result in cheque-bouncing incidents.
When a cheque bounces, legal action may be necessary. The issuer of the cheque can be taken to court, and a notice is typically sent to them. If they fail to pay the owed amount within the stipulated time, a formal case is initiated against them.
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In response to the legal notice, the chequewriter must repay the money within 15 days. Failure to comply can lead to the initiation of a criminal court case within 45 days of the notice’s expiration.
After 3 months, the cheque can be resubmitted if the writer assures that it won’t bounce this time.
Upon receiving a bank memo, the recipient can send a notice to the issuer within 330 days. If payment is not received within 15 days of the notice, a cheque bouncing case can be filed.
If no case is filed, the incident may be regarded as a false bounced cheque. To address this, file a complaint along with supporting documents that prove the cheque indeed bounced.
You may also read Legal Action Against Bounce Cheques: When to Pursue
Following the complaint, the issuer is required to appear in court. To recover the outstanding amount, individuals can also file a civil case or summary suit.
For efficient debt recovery, consider employing Debt Recovery Services to retrieve unpaid invoices and bounced cheque amounts promptly.
Ga registered Lawyers in Dubai, a leading law firm with over a decade of experience, can serve as your trusted partner in debt collection matters. Contact us now for a free consultation with one of Dubai’s finest lawyers, who can provide tailored solutions for your specific situation.