When you run a business that accepts checks, there is always the possibility of receiving a bad check from a customer. Rules for collection of the funds promised on a bad check vary by state. North Carolina, for example, has a collection procedure that offers the check writer ample time to remit a new payment without prosecution while simultaneously allowing the check recipient the ability to collect the original funds, service fees and bank fees.
Your business has 15 days to mail a certified or registered mail letter to the check writer notifying him that your business was issued a bad check and requires payment of all funds now owed within 30 days of the date your letter was mailed. At the end of this time period, you can send a second demand letter or contact your county's district attorney's office to find out if your county has a worthless check program (see Section 3).
The first notification letter sent to the writer of a bad check is very matter-of-fact. It does not presume that the check writer had criminal intent when he wrote the check, but fully discloses the ramifications of not paying your business the funds owed it according to the law. North Carolina Statute G.S. 6-21.3 provides a form letter that your notification should substantially follow. If you do not receive a response to this letter, you can send out a second demand letter before filing an action. Statue G.S. 6-21.3 provides a template for this communication as well. Within the copy you can demand all fees and funds listed in your original notification as well as treble damages. However, there are alternatives to mailing this second letter in some counties within North Carolina.
Worthless Check Deferred Prosecution Program
On a county by county basis within North Carolina there can exist Worthless Check Deferred Prosecution Programs. Each county can have a different worthless check program or none at all, but the basic principle of the programs is to treat both the check writer and business owner fairly. In Wake County, for example, for a business to be eligible for this program you must send a bad check notification letter to the check writer within 15 days via certified or registered mail. When 15 days have passed since you sent the letter, take a copy of the letter, your mailing receipts, the original check and a copy of the check to the district attorney's office. Fill out the "Application for Worthless Check Process" form. When the form is complete, the district attorney's office prepared and sends a demand letter.
Fees Passed on to Check Writer and Treble Damages
When your first notification is sent out to the bad check writer, you are allowed by North Carolina law to charge a process fee authorized by G.S. 25-3-506. As of May 2011, this fee should not be greater than $25 according to the statute. You should also list your bank's service fee for the returned check as the check writer must reimburse you for this. If a second demand letter is required, you are entitled to these fees plus treble damages. The check writer must pay you triple the value of the check up to a maximum level of $500 but no less than $100.
Ashley Mott has 12 years of small business management experience and a BSBA in accounting from Columbia. She is a full-time government and public safety reporter for Gannett.