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Focus on the Law: Dealing with Bad Checks: Civil Court

By Sharon Frankenberg,
Attorney at Law

When you receive a bad check it can be a major annoyance.  There are three ways to respond.  One, you can just accept the loss as a karmic lesson.  This is not my usual choice or recommendation. Two, you can attempt to collect your money through civil court.  Or three, you can possibly pursue criminal charges. You cannot pursue both civil and criminal remedies on the same bad check claim.

In Tennessee, collection of bad checks can be handled in civil court.  Which civil court you select to file your case in depends upon the amount you are seeking to recover.  General Sessions Court in Knox County and most adjacent counties have jurisdiction over amounts up to twenty-five thousand dollars ($25,000.00).   If the amount of your damages exceeds this, jurisdiction lies with the Circuit Court or the Chancery Court.  The statute on civil liability for dishonored checks may be found in the Tennessee Code Annotated, Sections 47-29-101 through 103.

The first part of the statute defines the party  liable on a bad check as “A person who, having executed and delivered to another person a check or draft drawn on or payable at a bank or other financial institution, with fraudulent intent either stops payment on the check or draft, or allows the check or draft to be dishonored by a financial institution because of lack of funds, failure to have an account, or lack of an authorized signature of the drawer or necessary endorser.”  The damages authorized by the statute include the face amount of the dishonored check;  ten percent (10%) interest on the face amount or unpaid balance from the date of execution until payment is made in full;  any reasonable service charges incurred by the payee (you, the victim) in attempting to obtain payment;  reasonable attorney’s fees incurred;  a handling charge of no more than twenty dollars ($20.00);  and  all court costs incurred in bringing the civil case.

Since the statute provides for recovery of attorney’s fees, you may wish to hire an attorney to collect the check.  If you choose to pursue the case on your own, you will need to send written notice that the check has not been paid by the financial institution to the person who wrote you the check.  You should also warn in the letter that you intend to ask the court for treble damages if fraudulent intent is found.  Treble damages means three times the amount of your loss.  This notice is considered as having been given at the time that it was deposited in the regular United States mail if it was addressed to the address printed on the face of the check or to the address given by the person in writing to you at the time the check was issued or delivered.  If the person who wrote you the bad check pays you the amount of the bad check in full within ten (10) days of this notice being sent, you cannot proceed with a civil case.

If the person does NOT pay you within thirty (30) days, you can file your case in civil court and ask for all of the damages previously mentioned.  If you notified the person that you would ask for treble damages and if the court finds that you proved fraudulent intent on his or her part, you may recover three times the face amount of the check not to exceed five hundred dollars ($500.00) .  Obviously this article does not cover every issue which might arise.  You should always contact an attorney to get advice and assistance with your unique situation.

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