What Is a Bounced Check Letter?

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  • Written By: Terry Masters
  • Edited By: Allegra J. Lingo
  • Last Modified Date: 10 September 2019
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A bounced check letter is written correspondence that notifies a party that a check has been returned by the bank upon which it is drawn for a lack of sufficient funds in the account to make payment. There are two types of bounced check letters. One type of bounced check letter is sent from the bank to the parties of the transaction, notifying each that payment of the check has been declined. The other type is a demand for payment letter sent by the person who received the check to the party who wrote the check, requesting the party make alternative payment arrangements.

Checks are legal tender that can be offered as a payment substitute for cash. The law requires a check to be “good,” or able to be immediately cashed from the balance in the account upon which the check is drawn. Bad checks, or checks that “bounce,” are declined by the bank that holds the account because there isn't enough money in the account to cover the transaction. Writing bad checks is illegal and can result in criminal prosecution if the writer intended to defraud the other party. Civilly, anyone who receives a check that bounces is authorized by law to pursue payment by alternate means from the check writer, along with certain fees and penalties that are particular to each jurisdiction.


A bounced check letter is correspondence that notifies parties of the status of a check that has been declined for payment by the bank and requests action on the matter. There are two types of letters that are ordinarily generated as a result of a bounced check. One type is the official correspondence from the banks involved, notifying both parties to the transaction. The check writer's bank sends a letter to notify him that the check was declined for insufficient funds and that his account has been charged certain fees as a result. Additionally, the party who received the check as payment and attempted to deposit it in his account receives a letter from his bank notifying him that payment was declined and the amount was removed from his available balance.

The other type of bounced check letter is a demand for payment sent from the party who received the check to the party who wrote it. This letter is used in the ordinary course of business to give the check writer the opportunity to make good on the payment before commencing legal action. The letter typically employs a standard format. It includes an opening statement that the check was declined by the bank, a request that alternative payment arrangements be made, and a deadline for receipt of payment. If the jurisdiction allows a fee to be assessed on bounced checks, that fee will be stated.


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