When cash advance lenders loan out money, the borrower generally enters a legal binding contract to repay the loan and any fees that have been government regulated. However, there are no laws that guarantee payment from the borrower for the returned check. Not paying the returned check could result in the closing of any and all accounts of the borrowers, which the bank and cash advance lender has the right to do if payment has not been made for the returned check or fees associated with the returned check.
Criminal Charges
If a borrower's check is returned to the cash advance lender for insufficient funds, no criminal charges can be brought. The cash advance lender cannot have the police or court of law file a criminal case against the borrower, because no law has been broken. The cash advance company may file civil action, but no criminal actions can take place against the borrower.
Types Of Fees
There are different types of fees associated with a returned check. The bank or financial institution that the check is written on can charge a fee to the account holder if a check is written on an account with insufficient funds, and the lender can charge fees to the borrower for the fees that the company's bank will charge for the returned check. The law allows these fees to be charged to the borrower for returned checks. The borrower is responsible by law for paying these returned check fees.
Small Claims Suit
Laws allow the cash advance company to file a small claims suit against a borrower in order to retrieve the money given to the borrower. A judge decides if the cash advance lender is eligible to receive the money given to the borrower for the cash advance, and what if any fees are to be repaid by the borrower as well. The laws for the time frame in which a cash advance lender may file a suite vary from state to state, as does the process to file the civil suit.
Bank Misconceptions
The laws that apply for the cash advance company do not apply to the bank that the check was written on. If there are no funds in the bank to cover the check, the check will not clear, and the bank can charge a fee for insufficient funds, and these fees are added to the checking account holder's balance. When the account does not have sufficient funds, but the bank pays the amount of the check as a courtesy, or because of overdraft protection coverage, the account holder must legally pay the amount of the check or he can be charged with a felony and face jail time, fines or both for passing a bad check.
Returned Check Prevention
To prevent returned checks, some cash advance lenders are allowed to give borrowers other options, such as payment extensions or payment plans. Each state has mandated repayment plans and grace periods that the cash advance lender must offer a borrower. When a borrower enters an extended repayment plan, she is still responsible to make on-time payments according to the extended agreement. Failing to do so can result in returned check fees, bank fees and payment of the original account in full.
