Statute of Limitations for Bad Checks

Statute of limitations defines the amount of time a merchant has to legally collect a debt by way of lawsuit. The debt can still be pursued, but a lawsuit can be dismissed based on an expired statute of limitations defense. The statute of limitations on a bad check varies from state to state and also varies based on dollar amount.

Statute of Limitations

The statute of limitations for the collection of a bad check ranges from three to 10 years based on the state in which the check was written, the amount of the check and the circumstances under which is was written. If the check was forged by someone other than the account owner, the statute of limitations is longer.

Penalties

Civil penalties for bad checks include collection of the face value plus penalties ranging from a flat fee to two to three times the face value of the check plus attorneys fees. Most states have a maximum penalty amount of up to $1,200 to $1,500 per check.

Expiration

The expiration of the statute of limitations for collection of a bad check does not preclude you from being sued, but the suit will be dismissed if you use it as a defense. If you do not bring up the expired statute of limitations in the hearing, a judgment can be entered against you and will require you to pay the debt.

Extension

Partial payments, payment arrangements and verbal agreements will all extend the statute of limitations for collection. If you do not intend to pay, do not make payment arrangements or partial payments against the debt.

Credit Reporting

Bad check debt can be reported to the credit bureaus. This reporting is not affected by the statute of limitations for collection. Most bad debt is reported for seven years.