How Long Can a Company Try to Collect a Bounced Check?

Writing a bad check can happen through a simple math error or mix-up at the bank. A bad check can also be a serious criminal offense depending on the intent of the check writer. A business owner or creditor has a varying amount of time to collect a debt resulting from a bad check, depending on the state. This statute of limitations may not be as important in a case involving criminal activity.

Statute of Limitations

The statute of limitations on debt collection for a bad check varies but usually falls in the two- to three-year range, according to the Fair Debt Collection website. A creditor has this length of time to sue you in civil court to obtain a judgment against you for the debt. Your creditor may choose to report the delinquency your bad check causes to a credit reporting bureau. A negative notation remains on your credit report for seven years and makes it more difficult for you to obtain new lines of credit and personal loans.

Caps on Fees

It is legal for a business owner or creditor in receipt of your bad check to charge you a fee for writing the bad check. This fee provides compensation for the creditor or business owner in recovering the penalty suffered from processing a bad check. Each state places a varying limit on the bad check fee a business owner or creditor may charge. This can either be a fixed dollar amount or a percentage of the total debt owed.

Limits on Lawsuits

You may be liable for a lot more money than simply the amount of your bad check depending on the state you live in. For example, according to credit information website BSC Alliance, if you live in California, a creditor or business owner may pursue you in civil court for up to three times the amount of your bad check, up to a maximum of $1,500. A New York resident may owe up to double the amount of the check plus $400 for insufficient funds or $750 if the check is from a nonexistent account.

Intent to Defraud

Intentionally writing bad checks is a serious criminal offense. Attempting to defraud a creditor or business owner by knowingly writing bad checks could land you in prison for at least three years. You could also end up owing a criminal penalty of up to $5,000 plus any costs incurred by those you attempted to defraud. There won't be an easy way to get out of paying these fines and costs as the court supervises your repayment and can use a variety of methods to force you to pay, including wage garnishment and seizure of income tax refunds.