Understanding What Happens When a Check is Written to You After an Account is Closed
Have you ever been in a situation where a check was issued to you from an account that was later closed? It's a common concern, and the answer may vary depending on the specific circumstances. In this article, we will explore what typically happens when a check is written out to you from a closed account, the implications for cashier's checks, and the legal implications of writing checks knowing an account is closed.
What Happens When a Check is Written Out to You from a Closed Account?
When a check is written out to you from an account that is subsequently closed, banks generally do not honor the check for payment. This is because the bank verifies that the account is active and has sufficient funds. If the account is closed, the check will typically bounce, meaning you will not receive any funds. This underscores the importance of ensuring that the account remains active when writing checks.
Contact the Issuer of the Check
The best approach is to contact the issuer of the check to resolve the situation. They may need to issue a new check from an active account to ensure that the funds are properly transferred. Communication and follow-up are key to mitigating any inconvenience or financial loss.
What if the Check Was Written to You from a Different Account?
In cases where the check was written to you, rather than from your closed account, the situation is slightly different. You can typically cash the check at the bank on which it was written or deposit it into a new account. This ensures that you still receive the funds owed to you.
Banks and Cashier’s Checks
Cashier's checks are a type of payment that is generally prepaid. When you purchase a cashier's check, money is taken out of your account and held in a special account at the bank to back these checks. If you close your account and have not yet cashed the cashier's check, you do not get that money back. However, you can still negotiate the cashier's check, meaning you can take it to another bank for payment.
The Purpose of Cashier’s Checks
The primary purpose of a cashier's check is to provide a secure and guaranteed form of payment. Once you buy a cashier's check, the funds are already removed from your account, and the check is backed by the bank. This makes it less likely that the check will bounce, even if your original account is closed.
Civil and Criminal Liability
Writing a check knowing that the account has been closed can be considered fraud. Banks typically do not close accounts without notice, and they do not let depositors withdraw their funds without providing proper notice. If you are aware that an account is closed but still write a check, you are potentially liable for civil and possibly criminal charges.
Dealing with Suspicious Payments
If you receive a cashier's check in connection with a closed account, such as a check representing the balance of the account sent with a letter stating the account is closed, you should proceed with caution. While the bank might cash the check if its value is not substantial, they are unlikely to do so for large amounts. It's important to consider the legal and financial implications of holding onto such a check.
Conclusion
When dealing with checks and closed accounts, it's crucial to understand the potential outcomes and take appropriate action. Whether you're dealing with a bounced check or a cashier's check, clear communication and adherence to banking practices are key. In any case, it is always advisable to contact your bank directly to discuss their specific procedures and policies.