4 tips for dealing with a bounced chequeLast modified: December 27, 2023
Dealing With a Bounced Cheque
Do you have customers that use cheques to pay for the services or goods you provide? Have you recently cashed a cheque, only to find out that it has bounced?
This is unfortunately a common occurrence for self-employed individuals. In recent years this has shown no signs of stopping.
In this article, our team of expert Private Debt Collectors have put together some tips for dealing with unpaid bounced cheques.
Dealing with a bounced cheque can be a frustrating and confusing experience. Regardless of whether you’re the payer or the payee, it’s important to understand the steps that need to be taken to resolve the issue.
To begin with, let’s define what we mean by a bounced cheque. Essentially, a bounced cheque is one that is returned unpaid by the bank. This could be for a number of reasons, including insufficient funds in the payer’s account or an error in the details written on the cheque.
If you’re the payee and you’ve received a bounced cheque from the payer, the first thing you should do is contact them to find out what’s happened. There could be any number of reasons why the cheque has bounced, and it’s important to get all the relevant information before deciding how to proceed.
Assuming that the payer is cooperative and willing to resolve the issue, the next step is to ask them to provide a replacement cheque or make an alternative form of payment. If they’re unable or unwilling to do this, you may need to debt recovery action to collect what is owed to you.
The legal position on a bounced cheque is quite clear. Under the Bills of Exchange Act 1882, a cheque is supposed to be as good as a cash payment.
How to Deal with a Bounced Cheque in the UK
In the UK, writing a cheque that bounces or is returned unpaid can happen to anyone. It can be a frustrating experience, but it’s important to know your options for dealing with it. Here are the steps to take if you receive a bounced cheque in the UK.
Step 1: Contact the Person Who Wrote the Cheque
Your first step should be to contact the person who wrote the cheque. Explain that the cheque has bounced and ask if they can make good on the payment. It could be that there was an honest mistake or an oversight on their part, in which case they may be keen to rectify the situation.
If you’re unable to reach the person who wrote the cheque, or they refuse to pay, you can take further steps to recover the money.
Step 2: Send a Letter Before Action
If the person who wrote the cheque is unresponsive or refuses to pay, you can send a Letter Before Action. This is a legal letter that sets out the details of the bounced cheque and demands payment within a specific timeframe.
You can either write the letter yourself or instruct a debt collection agency / lawyer to do it for you. The letter can include the following:
Sending a Letter Before Action can sometimes be an effective way to prompt payment. It can be viewed as a warning that recovery action may be taken if payment is not made.
Step 3: Consider Recovery Action
If payment is still not forthcoming after sending a Letter Before Action, you may wish to consider Debt Recovery action. This can be done via a professional debt collection agency and the debt cannot be disputed.
A robust debt collection agency can act quickly, maximising chances of payment being obtained.
Step 4: Other Options – Court action
The small claims court is typically used for claims up to £10,000, while the county court is used for larger claims. You will need to pay a fee to file a claim, which will be based on the amount of the claim. Then if a judgment is entered, you can progress with enforcing the CCJ appropriately, paying further fees accordingly.
It’s worth noting that this can be a lengthy and costly process, so legal action should only be considered as a last resort.
Bounced Cheque consequences for the issuer
When a cheque is bounced, there are consequences for both the issuer and the recipient. The issuer of the cheque may face:
Unpaid Bounced Cheques – Debt Collection Action
The case of Esso Petroleum Co Ltd vs Milton back in 1997 decided that it was that a cheque and a direct debit mandate treated the same.
Namely, it was a promise to pay that should be honoured.
By not honouring the payment puts you, the creditor, in a good position when launching proceedings for debt collection.
This is due to the clear evidence that the amount is owed, despite how hard the debtor may try to dispute this.
A bounced cheque also means that the debtor cannot spuriously counterclaim against the creditor.
This is due to the cheque payment demonstrating the debtor’s earlier intention to pay the full amount of what is owed.
What To Include When Providing Evidence To The Debt Collection Agency
If you choose to instruct a Debt Collection Agency to carry out the recovery of your unpaid cheque, they will need evidence of the outstanding debt.
Here are all the relevant details that will need to be submitted as part of your claim:
- A copy of the bounced cheque or direct debit mandate
- The date of the cheque or direct debit mandate
- The account name
- The account number
- The sort code
- The value of cheque or failed direct debit payment
- The date of default
Any other background information that will assist the team of Debt Collectors will also be valid.
It is important to remember that you received a cheque for payment, meaning there is no excuse to seek the same value as per the cheque value.
This will also include any possible costs incurred as a result.
Choosing Frontline Collections To Recover Your Unpaid Bounced Cheque Debt
If you have read this article and are suffering from unpaid bounced cheques, it is time to get in contact with us. Our expert team of Private Debt Collectors at Frontline Collections can help.
We understand how frustrating this situation is and we are here to help, ensuring the maximisation of a successful result.
Our team of industry experts are able to help regardless of whether you are a private individual or a business.
Since 2005, we have operated the industry’s highest recovery rates which, complemented by our low commission rates.
This is to ensure those that are suffering from unpaid bounced cheques do not have to pay a large fee on top of that to get it recovered.