Consumers in general have made the move towards more environmentally friendly banking tendencies by doing more of their banking online. Mobile banking and online services have made it easier to conduct business and tend to your finances at lightning speed.
However, there may be some occasions when people could do without the fast banking online services provide, such as when they do not have all of the cash they need to complete a transactions, when a bill comes due or when money is owned to another person. In the past, writing a check gave people a few extra days to get their money in order and make some deposits. Nowadays, while checks may be a less popular banking service, they have a much faster turnaround time and much higher fees than in days past.
Writing checks to satisfy creditors and even debts to friend and family may still happen. In fact, some companies like bill collectors still encourage people to write and mail post-dated checks as a means of dealing with their debts. A post-dated check is a check written in the present but bears a date in the future. Generally, post-dated checks are issued by an individual that does not presently have the cash in the bank to cover the funds. It may seem like a good way to get you out of a tight spot financially, but times and the laws have changed quite a bit over the years.
Why Post-Dated Checks Are a Bad Idea
As mentioned, many people write post-dated checks to get out of a bind. During the confusion of trying to settle on an overdue debt, people tend to want the easy way out and when offered the chance to send in post-dated checks, they jump at the chance to get out of trouble without much forethought.
There are several issues that can arise shortly after where you realize the post-dated check idea was not good at all. While it is not likely you will be criminally punished for writing a post-dated check, it is important to know that should your post-dated check be deposited “early,” you may be investigated for fraud by the bank or by the creditor. Your check may be returned as NSF, which can have consequences including penalties from the party receiving the check and stiff NSF fees from your bank.
Banks can cash or deposit checks that have a date in the future unless the person issuing the check has provided the bank notice with reason, in writing, that you have written a post-dated check. In doing so, the bank could actually bear the liability of any money losses due to the early cashing of the check.
Post-Dating a Debt Collection Payment
As the most common practice of submitting a post-dated check occurs when debt collection agencies are involved, it is important consumers understand they have rights when it comes to how a debt is collected under the Fair Debt Collection Practices Act. These federal regulations limit the ways debt collection companies can collect on a debt specific to the act of writing post-dated checks.
For instance, a check written to satisfy a debt payment in the near future may not be marked more than five days in advance unless the debt collector has provided a written confirmation to the payee concerning their intention of depositing the check. Additionally, debt collectors are not allowed to threaten a consumer with depositing a post-dated check prematurely as a means to collect more on a debt.
Personal finance experts advise that all consumers dealing with debt collections understand their rights under the FDCPA and plan a strategy for satisfying their debts in the shortest amount of time. While it may sound simple to issue a handful of post-dated checks so the bill collectors would stop calling, it is better to not provided a post-dated check to anyone for any reason.
When you are unable to make good on a debt, don’t let the situation get to the point of non-stop collection calls to make you take action. Instead, speak with your original creditor about a payment plan that will keep you on track so you do not have to resort to unfair collection practices in the end.