Cheque I deposited bounced: what to do?

A cheque you deposited has been returned unpaid by the payer's bank. This is often called a bounced cheque or a returned cheque. The money may have appeared in your account temporarily, but it has now been reversed. You may also have been charged a returned cheque fee by your bank.

What is happening

When you deposit a cheque, your bank credits your account provisionally. It then presents the cheque to the payer's bank for payment. If the payer's account has insufficient funds, the cheque is stale-dated, the account is closed, or the signature does not match, the cheque is returned unpaid. Your bank reverses the credit and may charge you a fee. The cheque itself is not automatically a guarantee of payment.

What to do first

1. Check your bank account and any notices. Confirm the cheque was returned and note any fee. Ask your bank for the reason for the return if it is not clear.
2. Do not use the funds. If the money was already spent or withdrawn, you may have a negative balance. Do not send goods, complete work, or transfer money based on the bounced cheque.
3. Contact the payer promptly. Tell them the cheque bounced and ask for a replacement cheque or another form of payment such as a bank transfer. Keep the conversation polite and in writing where possible.
4. Keep records. Save the bounced cheque, the bank's return notice, and all messages with the payer. These may be needed if you have to take further action.

What NOT to do

• Do not redeposit the same cheque without checking with your bank. It will likely bounce again and may incur another fee.
• Do not accept a replacement cheque from a payer you do not trust without verifying funds. Consider asking for a bank draft or electronic transfer instead.
• Do not threaten or harass the payer. Keep communication professional.
• Do not ignore the issue. A bounced cheque can lead to overdraft fees and damage to your credit if your account goes negative.

When to seek professional help

If the payer refuses to pay or cannot be reached, you may need to take legal action. For small amounts, small claims court is often the simplest route. For larger amounts, consult a lawyer. If the cheque was intentionally fraudulent, report it to your local police and your bank. Keep in mind that laws about bounced cheques vary by country and state.

How to prevent it

• Ask for payment by bank transfer or another guaranteed method when possible.
• For large or unfamiliar payments, wait until the cheque has fully cleared before releasing goods or services.
• Consider using a cheque verification service if you regularly accept cheques.

Act quickly and keep good records. Most bounced cheque problems are resolved when the payer issues a replacement payment. If not, you have clear steps to recover what you are owed.