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Dealing with an unpaid bounced cheque

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Recovery of bounced cheques

When it comes to the problem of dealing with an unpaid bounced cheque, it is relatively straightforward in terms of its validity. A cheque is seen by the law to be the same as a cash payment and therefore a legitimate promise to pay. That said, using cheques for payment are becoming more and more uncommon with the advance of card payments and suchlike.

That said, many large companies and some people still use cheques as a valid method of payment. Sometimes cheques bearing large amounts remain unpaid and are returned by the bank on which they are drawn.

A payment failure from a bounced cheque however represents unequivocal evidence that not only you are owed money, but also how much and the date at this money was paid.

The Bills of Exchange Act 1882 provides legislation for the occurrence of a unpaid cheque, whether it be refer to drawer or otherwise. Therefore the issuer is indebted to the creditor for the sum stated on the respective cheque.

A cheque can be ‘bounced’ for a number of reasons::

– insufficient funds in the bank account
– it has been cancelled by the paying party
– a technical reason such as the cheque not being dated or signed.
– fraudulently issued

Debt Collection Action

After the case of Esso Petroleum Co Ltd v Milton back in 1997, it was decided that a cheque and a direct debit mandate should be treated the same, namely that 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 as its evidence that the amount is owed and cannot be disputed however hard the debtor may try.

A bounced cheque also means that the debtor cannot spuriously counterclaim against the creditor as the cheque payment demonstrated the debtor’s earlier intention to pay the full amount.

When your debt collection solution requires you to provide evidence for the outstanding debt, make sure you have all the relevant details below to submit as part of your claim.

These comprise of:

• 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

Obviously any background information will assist with any Debt Collection action however, the simple fact that you were given a cheque for payment means there is no excuse to seek the same value as per the cheque value as well as any possible costs incurred as a result.

First choice Solution

Give our friendly New Business Team a call if you need any assistance with the Collection of a bounced cheque. We understand how frustrating it is and are here to help you where possible.

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