I Wrote Bad Checks Before Filing Bankruptcy, Now What?

Bad checks written before your bankruptcy filing cannot be discharged. Writing a bad check is a criminal offense which can be punishable by a fine, imprisonment or both. However, there may be some actions you can do to fix the problem before filing bankruptcy or during your bankruptcy process.

What Is A Bad Check?

A bad check is any check written against a bank account which you know does not have sufficient funds, is closed or that you are not authorized to use. If a bankruptcy debtor wrote a bad check as defined by the law, they will not be able to discharge that debt in bankruptcy.

Can I Go To Jail?

Even if you file bankruptcy, a business or individual has the right to pursue you legally if you gave them a bad check. Bankruptcy will not protect a debtor who has accumulated debtors through criminal behavior. However, the business or individual who received the check is still obligated to go through the legal process to prove that you did in fact write a bad check. If a debtor with this type of debt files bankruptcy, the recipient of the check will need to request relief from the automatic stay if they want to pursue criminal charges. However, it is rare that checks for small amounts are pursued in bankruptcy or in criminal court. But checks written for amounts over $1500 are considered felony offenses and can carry serious jail time in some states.

But I Didn't Intend To Write A Bad Check

There are circumstances where a check which has bounced will not be considered a "bad check" in a legal sense. For example, if the bankruptcy debtor wrote a post-dated check and the creditor cashed it before the agreed upon date, this type of bounced check may not be considered a criminal offense. But the bankruptcy debtor will need to consult with an attorney to make sure they can't face criminal offense due to the bounced post-dated check.

Is There Anything I Can Do To Fix It In Bankruptcy?

If you have written one or more bad checks, speak with your bankruptcy attorney about how you should handle the situation. While it is not common that checks for small amounts will become criminal cases, it is possible. Debtors should file their bankruptcy with plans to deal with any check issues so that they don't cause larger problems down the road. As part of your bankruptcy planning process, your bankruptcy attorney may suggest that you pay off the checks. If this is done properly, paying off a check before bankruptcy may not be considered an unfair preference or illegal transfer of assets. If you are filing Chapter 13 bankruptcy, you may be able to pay off the checks over the course of your repayment period.

Reed Allmand is constantly looking for ways to improve the financial situation of his Dallas Bankruptcy clients. You can visit http://www.allmandlaw.com/ to view more articles like this and find great tips on managing your financial situation.