What To Do When The Check Bounces

Home Stager with Moving Mountains Design Home Staging, Pasadena, CA

What to do when the check bounces

Writing a check

Sooner or later, it will happen to you: Your client's check gets returned by the bank for NSF (Not Sufficient Funds). Its an awful feeling to get that notice from your bank. You worry that maybe you got ripped off, that you'll never see that money again. You worry that you may have to take your client to court - a terrible waste of time with no guarantee that you will be able to collect IF you win.

More often than not, the check didn't clear because the client made an accounting error or a check they deposited has not cleared their bank yet. In many cases it was an honest mistake and your client has every intention of making good on their check. But every once in a while we come across a lousy client, a bad apple, who never had any intention of paying for the goods or services you provided. I'm fortunate that in all the years I've been in business as a professional home stager in Los Angeles, I've only had one client who defrauded me part of the money he owed for staging his home. I lost $1,500...not a devastating amount, but this client's dishonesty still rankles.

I've had other client checks returned for Not Sufficient Funds, but the client has always made good and I've been paid in full, plus any additional charges that were incurred.

Here are the 2 most important things you can do to protect yourself:

  1. Don't work with clients who are unethical or ask you to do something that makes you uncomfortable, clients that are having serious financial problems, clients who won't sign your contract or clients who ask you to work "under the table".
  2. Have a clearly written contract (make sure to get it signed by the client) that spells out the cost of your product or service, how payment can be made, when you expect to be paid, the penalties for not paying on time, and the penalties for a returned check. This is the most important step you can take to protect yourself and your business. Have an attorney, licensed to practice in your state, review it. It will be money well spent.

Following are some steps I take when I get a NSF check, or when the client is slow in paying their outstanding invoice:

1. Contact the person that gave you the bad check via email. Start a "paper trail" in the event you choose a legal solution if the client or customer refuses to pay. Write the email as if you are assuming this was merely an error or mistake on your client's part.

  • Point out the date the payment was due
  • Point out any charges outlined in your contract for returned checks
  • Ask them when you can pick up another check (I always ask for a cashiers check or cash if a check bounces, but this is up to you) or if they would like to put the charge on their credit card.
If you become too aggressive too quickly, you stand a chance of offending a good client that made an error or mistake. You also stand a chance of closing the door on future communication and the possibility of getting paid if the client perceives you as too aggressive or unprofessional.
Always act professionally, even if you are angrier than you have ever been before.
2.  If you don't receive a response within 24 hours, send another email. If possible, its best to do everything in writing. If you call the client, make sure to send them a follow up email outlining every thing you discussed and your understanding of what the client said. Again, that paper trail is all important. Your email and conversation should reflect an assumption that the client is going to pay you and you are inquiring when you can pick up payment.
You will usually know within the first 48 hours if your client is going to make good on their bad check or if they won't.
3. If you don't receive a response within another 24 hours, send a letter via registered mail to their home. Include a copy of the returned check. Ask them to contact you and let you know when/how they will make good on the bad check. Explain that you have sent several emails.
4. If the amount is less than your state's limit for Small Claims Court, you can file a claim. The cost is minimal, usually less than $100, but it is a large time commitment. In addition to the time it takes to file, you must make sure the other party is "served" papers informing them that you have filed a claim and a court date is set. Then you have to go to court and present your case. If the judge rules in your favor, you are then responsible for collecting (you may win, but you may not be able to collect). Most small claims courts do not allow the parties to be represented by an attorney in court, so you are on your own in the courtroom.
5. If the amount is significant enough, contact an attorney specializing in collections or a collection agency. You can hire them just to write a strongly worded demand for payment, or you can hire them to handle the collections. Most attorneys and collection agents receive 20%-33% of the amount collected, plus expenses, if it goes to court. They do not take on every case - only the ones they have a reasonable chance of collection. You can also sell the debt to a collections agency, in which case you will receive a smaller but guaranteed percentage. Very often, receiving a letter from an attorney or a collection agency is enough to motivate a reluctant client to pay.
I have found that by accepting credit cards and giving people an alternate way to pay, I get paid faster and have much less difficulty getting paid if a client's check bounces.
BTW, some collection agencies will take on collection of debt that is a few years old, so if you have a situation that occured a year or 2 ago, it may be worthwhile to contact a collection agency. I don't recommend sitting on a debt for a long time, but if you have, there still may be a chance to collect something.
If you are the person that wrote the bad check here are some steps to make sure the situation does not spiral out of control or that the person will work with you again:
  1. As soon as you discover that you don't have enough money to cover the checks you wrote, contact the people to whom you wrote the checks. Explain you just discovered the error and apologize. After all, you have just put them in a very difficult and uncomfortable situation.
  2. Offer to make good on the check and any fees they may have incurred when your check bounced.
  3. Don't be offended if they ask to be paid in cash or cashiers check to replace the bad check or for future purchases or invoices. They're just trying to make sure it doesn't happen again.
What do you do when a client's check bounces, or they are slow to pay outstanding invoices?
Posted by


Los Angeles Real Estate Staging

2015 RESA Professional Stager of the Year

2014 RESA Top 10 Professional Home Stager2010 RESA Professional Stager of the Year

Michelle has staged hundreds of Los Angeles homes, many of which have sold with multiple offers, above listing price.

She works with home sellers, listing agent, builders, flippers and asset managers to prepare homes for sale throughout Los Angeles and North Orange County.

Moving Mountains Design provides vacant home staging, color consultations, corporate and executive relocations,  and interior design. We also stage model homes, REOs, foreclosures and auction properties for real estate investors and asset managers. Builders hire us to stage their models or to help move inventory when sales slow down.

For more information about our Los Angeles home staging services, contact Michelle at (626)385-8852 or by email.

Click here to see our Los Angeles home staging portfolio

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Click here for more information about home staging in Los Angeles and how we can help sell your home faster and for the best price

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Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

I've had a few tenants bounce checks over the years and typically I make them pay with money orders or certified funds after that happens.  The only customer I ever had that bounced a check on me is now 10 years in jail for fraud.  He apparently scammed quite a few people besides just me.

Oct 02, 2011 04:27 AM #31
Linda Jamail Marshall
Linda Marshall,Houston Texas, Linda Marshall, Realtors® - Houston, TX
Broker, ABR,QSC,RECS,ACRE - Innerloop Houston, Tex

Great post Michelle, this is always an issue and appears to be happening more and more these days.

Greetings from Innerloop Houston.


Oct 02, 2011 05:09 AM #32
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Redeposit check, contact check writer, secure another check, collect cash, credit card or other means of payment, make an offer they can't refuse, get Vito to pay them a visit, just kidding, file small calims action, get judgment, attach assets, sell judgment and finally avoid all of this nonsense. Heh, heh, heh.

Oct 02, 2011 05:53 AM #33
Martin Kalisker
Greater Boston Association of REALTORS - Boston, MA
Professional Standards & Legal Assistant

I've only had to take one (former) client to small claims court for a rental commission that they didn't pay.  I won the judgment, but they still never paid and they had moved (and skipped out on the landlord) by the time the Sheriff came to deliver the habeas warrant for their arrest.  Long story short, the cost of legally defending your claim is usually more than your fee - - and these scumbags  folks know it.

Oct 02, 2011 06:10 AM #34
Damon Botticelli
Silver State Realty & Investments - Las Vegas, NV
Realtor - Las Vegas Real Estate

Are you able to put a mechanics lien on the property if they don't pay?

Oct 02, 2011 06:20 AM #35
Marshall Brown
Mid America Inspection Services, LLC - Fargo, ND

I have been stiffed a few times over the last 10 years or so but have only had one bad check. I called the bank and they said that if it was there when I called there were sufficint funds. I drove the 60 miles to cash it. You can always follow up with the bank as a first step.

Oct 02, 2011 06:21 AM #36
Kathy Schowe
California Lifestyle Realty - La Quinta, CA
La Quinta, California 760-333-8886

Great post-- luckily we don't have to accept payment now that electronic wiring of funds is available.  Kathy

Oct 02, 2011 06:36 AM #37
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Same as you explained. I have had checks bounce because a sellers check bounced to me for services I had to pay up front for. The lock smith I would never use again because he was so NASTY. It was my fault but not really. Client paid me & everything was swell except for the lock smith. Then he wrote a letter saying he put me on the 'banned' list.  I wrote him back telling him that I wrote all 200 agents in my company what a fine company he was running.

Stuff happens sometimes.

Oct 02, 2011 09:00 AM #38
Elisa Uribe Realtor #01427070
Golden Gate Sotheby's International - Oakland, CA
California Homes for Sale in the East Bay

NSF-yikes! I haven't had it happen to me yet but it's a numbers game for sure, great tips and ideas in keeping the payment process moving if you run into a snag. thanks

Oct 02, 2011 11:36 AM #39
Ann Cordes
Century 21 Randall Morris and Associates, Waco - Waco, TX
Home Ownership is Not a Distant Dream


   I had this happen to me recently. I had a buyer who backed out of a deal during the option period because of things that showed up in the inspection. Her mortgage comany had already ordered an appraisal, which she had to pay for.

  Of course she got her earnest money bacK, but under normal circumstances would not be entitled to get the option money back. The sellers felt bad and refunded it, but when she went to the back to cash it ($50), it bounced. The sellers agent said wait until after the 1st of the month and try again. We'll see what happens.

Oct 02, 2011 01:50 PM #40
Lori Kim Polk
Premiere Home Staging : Home Staging Services - Roseville, CA
Home Stager - Roseville, Sacramento

Great info Michelle! Only happened one time and the clients were so embarrassed. Just another reason to take credit cards nowadays ;))

Oct 02, 2011 04:15 PM #41
Travis "the SOLD man" Parker; Associate Broker
Team Linda Simmons, Enterprise, AL 36330 - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

I had my own businesses for over 30 years and only got totaly burned on about 3-4 checks the whole time. I always started with a "friendly customer service" phone call to "alert them that their bank apparently had made a mistake, and they needed to investigate before other checks they had written elsewhere were returned". Depending on the circumstances, I normally offered the chance to reimburse me with cash/money order ASAP with NO additional charges (or, if my bank charged me, just what that charge was with no additional charges). This gave the sloppy book-keepers a chance to correct the mistake and I got some Good-Will from a potentially bad situation. If they DIDN'T take advantage of my Penalty Free period, I knew then that it was NOT an honest mistake and started the full Legal Press on them.

Only one bad earnest Money check so far. The guy immediately brought a Certified Check, but it ALMOST messed up his financing. This was made worse by the fact that he'd gotten a short term case of Buyer's Remorse, and had been looking for a way out, which this would have provided him. All ened well as he wentr thru with the Purchase and is NOW very happy that he did!

Oct 03, 2011 02:47 AM #42
Leslie Causey
LC Home Staging & Redesign - San Antonio, TX

Hasn't happened yet, but thanks for sharing Michelle. Great info!

Oct 03, 2011 04:10 AM #43
Karen Otto
Home Star Staging - Plano, TX
Plano Home Staging, Dallas Home Staging, www.homes

What an excellent and thoughtful post Michelle chock full of information that can save us all a lot of time and energy if this ever happens.  Thank you for sharing! I've book marked it!

Oct 03, 2011 05:39 AM #44
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I think you handle it very well.  I have been in the bad position of having something like that happen (by mistake).  It is always nice when they are polite on the other side of it. 

Oct 03, 2011 11:59 AM #45
Kasey & John Boles
Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com - Boise, ID
Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties

To date I've never had a client's check bounce - I suppose very easily an Earnest Money check could - but I always tell them if they are writing it the money needs to be in the bank, even if it isn't being deposited until acceptance. Great post. -Kasey

Oct 03, 2011 07:56 PM #46
Kimo Stowell
HI Pro Realty LLC RB-21531 - Honolulu, HI
REALTOR Associate® RS-76763 - Honolulu Hawai'i

Aloha Michelle,

I just had a returned check last week, which I believe was unintentional, the first ever. Although they have been indirectly informed, I haven't seen the client yet to rectify the situation, but I have a feeling they are more embarrassed then anything else. Oddly coincidental.


Oct 04, 2011 08:47 AM #47
Jayson Holland
Listings.com - Denver, CO
Jay Holland

This happens on rent checks all of the time. We use the one+done policy. You are granted the privilege of paying with a personal check, until you bounce one, then it is all cashiers checks and money orders from then on. Oh yeah, and you have to make good on the bounced check, and pay the fees and late fees, immediately, or else you get evicted.




Oct 18, 2011 09:27 AM #48
Matt Robinson
Professional Investors Guild - Pensacola, FL

As Realtors, we typically only deal with certified funds at closing, so not many bounced checks.  I had an EMD check bounce once early on in my career, but the client brought in cash right away and deposited at the title company and the deal still went through.  A few years ago when I used to teach seminars, I had a few NSF checks, but the people just brought back the product, so I am fortunate to not have many bad experiences with it. 

Mar 10, 2012 01:06 AM #49
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

You have a good policy and attitude. When a check to redeem a promissory note bounces, then things get hairy real fast!

Oct 10, 2012 12:30 AM #50
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Michelle Minch

Home Staging Los Angeles and Pasadena, CA
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