Laws Empower Owners To Collect on Bad Checks

(Originally published in The Business Journal)

Every business owner who has been paid with a bad check has felt the panic and anger that event creates. 

A bounced check can start a chain reaction that has widespread consequences, especially in difficult economic times when everyone’s accounts are running lean.  At the very least, a dishonored check will cost you bank fees and force you to take the focus off the daily affairs of your business.

Fortunately, Ohio civil and criminal law recognize the problems that can arise when someone passes a bad check. With the right knowledge, owners of even the smallest businesses can use these laws to gain significant leverage against such problems. 

Harsh Penalties

When someone issues a check they know is not valid, they commit a theft offense under the Ohio criminal code.  If the local prosecutor is alerted to this activity, the person could be convicted of the crime of “passing bad checks.” 

Depending upon the amount of the check, passing bad checks can range from the most serious misdemeanor offense up to a third-degree felony.  A prosecutor also has the power to aggregate all bounced checks that are issued by one person within a 180-day period.  Thus, the seriousness of the crime can quickly escalate. 

Ohio civil law also imposes extremely harsh penalties for passing bad checks.  The Ohio civil code allows a creditor to sue the debtor who issued the check for up to three times the amount of the check and to recover all costs and attorney’s fees associated with that lawsuit.  This is a sharp contrast to the usual rules for collecting a debt, which do not allow recovery of attorney fees or compounding of recovery.

Take the Right Steps

However, the same statute that makes those civil remedies available is very specific about how and when these remedies can be sought.  The statute requires the creditor to give a debtor specific notices and warnings about the potential penalties before proceeding with a lawsuit if a creditor intends to collect costs and attorney fees. 

Contacting an attorney who is familiar with this area of the law and who can guide you through the process of reporting the crime and laying the groundwork for a civil lawsuit is well worth the effort.  

Creditors rarely need to file a lawsuit to collect on a bounced check.  Usually, once a debtor receives the required legal warnings and notices, they quickly get the message that you mean business.  Few people are willing to risk serious criminal consequences and exorbitant legal expense over a bounced check. 

Avoid Common Mistakes

There are a couple mistakes commonly made by creditors on this subject.  First, some creditors who believe they’ve received a bad check cannot resist the temptation to become a detective to try to determine if a check will clear if it is deposited.  This temptation usually motivates them to call or visit the debtor’s bank to talk with someone about the debtor’s account.  This activity is almost always an exercise in futility. 

Regardless of what someone at a debtor’s bank might tell you, until you deposit the check and the bank dishonors it, neither the prosecutor nor your attorney will have the information and leverage they need to help you get paid and to punish the person who issued the check.    

Second, some creditors hit by bad checks tend to rely completely on law enforcement to assist them with getting their money back.  Although reporting a bad check to the local police or sheriff’s department is well within your rights, it should not be your only course of action. 

Local law enforcement does not work for you, and they will be more focused on punishment and deterrence of crimes, generally, than on making sure you get paid. 

On the other hand, the Ohio civil law was specifically designed to give you tools to help you get your money and it should not be ignored.  Your attorney can use these tools to make sure you get paid.        

Baronzzi can be at cbaronzzi@hhmlaw.com or at (330) 337-6586.