BK vs Bad Checks

[frogger]

A question that I can't seem to find a straight answer for:

John Doe writes a check to pay for a product that he is purchasing.

The check that John Doe writes is returned for non-sufficient funds by his bank.

John Doe will not honor or redeem his returned check.

2 months later, John Doe files for BK13, including this nsf check.

Is it legit for this check to be included in the BK13 filing, or can this nsf check still be prosecuted?

In normal circumstances, a bad check warrant could be sworn out against the check writer, as the check was for present consideration.

Does BK change/override the criminal act?

State = Georgia

Thanks in advance.

[HHM]

Answer, generally no. BK does not trump criminal. It is really up to the District Attorney's Bad Check Division as to what they want to do. The vendor could swear out the criminal affidavit. Normally, once the DA finds out a BK, it will usually drop the issue, but it doesn't have too, the issues are separate.

There are 2 components to a bad check.
1. The civil liability to the vendor for the funds (this is a claim like any other in a BK).
2. The potential criminal liability for issuing a bad check. This aspect is not prevented by a BK, but as a practical matter, most DA's won't pursue if BK has already been filed.

Your mileage may vary.

[catleg]

This is relevant to the issue of casino markers, which are dateless checks normally held uncashed for some time period by the casino.
(7-30 days, possibly more).
The gotcha is, was the check good when it was written? In the case of one Atlantic City casino, their collection attorneys routinely request bank statements from bankrupt debtors (actually, directly from their banks) in hopes of finding that there was not sufficient funds at the time the marker was signed to make it good. In which case it becomes non dischargeable. There have apparently been at least one criminal prosecution for marker fraud in NJ but it is extremely rare; whereas in Nevada it seems to have become part of the standard collection routine. Although the rumor is if you file BK before it gets to the DA's office , you're good.

[frogger]

Thanks HHM & catleg for your input.

[HHM]

This is relevant to the issue of casino markers, which are dateless checks normally held uncashed for some time period by the casino.
(7-30 days, possibly more).
The gotcha is, was the check good when it was written? In the case of one Atlantic City casino, their collection attorneys routinely request bank statements from bankrupt debtors (actually, directly from their banks) in hopes of finding that there was not sufficient funds at the time the marker was signed to make it good. In which case it becomes non dischargeable. There have apparently been at least one criminal prosecution for marker fraud in NJ but it is extremely rare; whereas in Nevada it seems to have become part of the standard collection routine. Although the rumor is if you file BK before it gets to the DA's office , you're good.

Thank you catleg, but let's not confuse the two issues.

I am NOT talking about checks issued as security (casino markers, or pay day loan advance), I am referencing actual bad checks. I.e. a check written to Walmart to buy goods that bounces. The criminal issue remains regardless of the BK, but as a practical matter, the DA may not do anything once a BK is filed. The other problem, is the debt is not entitled to priority, so you can't just place it in a chapter 13 and have it paid ahead of other creditors.

[AngelinaCatHub]

I agree HHM, but Catleg was bringing up a good point. If the check written was knowingly without backing that is a felony immediately. However, anyone can make a clerical error and it does not normally become a crime until after collection has been attempted. The maker has a right to make it right. If he cannot or refuses, then it moves into a fraudulent crime. If it is made good after usually two to four weeks, a crime is not considered. It has all to do with intent.

Probably in a 13, the checks would be paid 100% before other secured debt. 'Hub

[AngelinaCatHub]

Here is a good and simple explanation of bad check procedure.

http://www.ckfraud.org/faq.html

[frogger]

This is going to get interesting. The bad check can not be pursued for collections, but it can be listed in the Chapter 13 filing as unsecured debt. However, with that being said, the criminal act can be prosecuted, as long as you are attempting to prosecute the criminal act, not collect the debt.

So..... the criminal warrant will be forthcoming for the criminal act of writing the bad check. This is not an attempt to collect the debt, but to prosecute the crime. It just so happens however that if the case is won in court, the person that wrote the bad check will be required to pay restitution.

[catleg]

I didn't mean to imply anything other than, casino markers are probably the most common type of "bad check" debt that runs through the bankruptcy system.

Most casinos are willing to eat it, but a few (most notably properties related to Steve Wynn, current or former ownership) fight like the dickens.

[GoingDown]

With the exception of tiny stores, very small businesses, or private transactions, I would think it would be rather difficult to pass a bad check these days. On the very rare occasion when I see someone pay at an ordinary store with a check, the cashier runs the check through a machine that instantly reads the routing number and account number and acts like swiping a debit card against the account. The amount of the check becomes a pending transaction against the account, and is instantly verified to be a good or bad check immediately.

When I worked in the rental business for awhile, if a prospective renter wrote us a check, we called down to the bank to verify whether the check was any good before we handed the renter the keys to the apartment. Small businesses should do the same thing.