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Your Legal Corner - Client Alert Blog

How To Sue for a 'Stop Payment' or 'NSF' Check

Written By: Melissa C. Marsh, Esq., California Attorney, July 2011 Add to Favorites
A bad check is a check the bank will not honor. There are two kinds of bad checks: (1) checks marked Non-Sufficient Funds (NSF), which occur when there is not enough money in the account to cover the check; and (2) checks returned because the maker issued a Stop Payment order, which occurs when the account holder instructs the bank to stop payment.

If you have received a bad check without a good faith dispute, you can always sue for the amount of the check plus bank fees. However, if you first send a demand letter and are not paid within 30 days then pursuant to California Civil Code Section 1719, you can sue for the amount of the bad check plus three (3) times that amount in damages (up to $1,500).

Example No. 1. If the bad check was $250, you can sue for $250 plus $750 (3x the amount of the bad check) for a total of $1,000.

Example No. 2. If the bad check was $1,500, you can sue for $1,500 plus an additional $1,500 (the maximum allowed by law) for a total of $3,000.

Example No. 3. If the bad check was just $30, you can sue for $30 plus an additional $100 (the minimum allowed by law) for a total of $130.

To bring this kind of lawsuit, you must first send a demand letter to the person who wrote the check by certified mail return receipt requested. In the demand letter you should set forth the amount of money you are owed (the amount of the check, the cost of certified mail and service fee, and the bank fees levied by your bank for the bad check up to $25), what the money was owed for, the fact that the check was returned for either nonsufficient funds, or a stop payment, and a demand that the person remit payment within 30 days via a money order or a bank certified check.

If you receive payment, obviously you have avoided a lawsuit altogether. If you do not receive payment within 30 days, then you can file a small claims lawsuit for the amount of the bad check plus damages.

Make sure you bring the following with you to Court so you can prove your claim: (1) The bad check; (2) copy of your bank statement if bank fees were levied; (3) A copy of the demand letter sent; (4) the certified mail receipt for the demand letter; and (5) proof that a good faith dispute does not exist—text messages, emails, invoices for services rendered or products delivered, etc...

Posted In: Business Law Bulletin  Corporate Client Bulletin  Real Estate Reporter 

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.