Personal finance: Debtors, watch the bounced cheques!

The first positive action a debtor must take when facing a debt-crisis is taking ownership and responsibility for their debt and all the instruments attached to that contract, which includes post-dated cheques.

This does not only include getting to grips with your complete financial situation, exposure and the risks you are facing, but also knowing each and every single detail of the movement of any cheque, direct debit or negative status your account reflects.

I am amazed to find that debtors facing this problem have no idea of:

a.     Details of the guarantee cheques issued to their creditors;

b.     This includes:

i.     The date

ii.     Amount

iii.     No cheque copies for their records

iv.     No direct debit form copies they signed

v.     Some are even unsure of which bank’s cheque they issued

vi.     Whether they issued 1 or more cheques in cases where credit limits were increased or restructures were secured

vii.     Finally they have not requested the original guarantee cheque or a letter confirming that the cheque is now replaced and is therefore null and void

I understand when you secure credit with no known industry standard guarantee that you may be accustomed to but a cheque, where you are excited to be the recipient of this new credit facility.

That does not mean you lose your mind, you forget to secure yourself and the significance of protecting yourself and not simply leaving yourself vulnerable to unecessary legal action when you could have avoided it.

My rules for you are:

1.     Maintain records of every cheque you issued, whether current or post-dated.

2.     Where you can and you issue a cheque to someone, make a copy and ask them to sign that they received it and maintain the relevant contract or agreement copies with the cheque copy for your records.

3.     Keep the file in a safe place.

4.     Where you replace that cheque, ask for the original and sign their document that you retrieved it.

5.     Follow the same process for the new replacement cheque you issued.

6.     Record all issuing data on your cheque folio of each cheque, including the date you issued the cheque.

7.     Regularly check that all your sequenced cheques are still in your cheque book, especially if you are the careless type and the moment you find cheques missing, officially report them to the Police and keep that document in the same file or try to keep a personal file with you daily so you keep that with you too.

8.     Once your creditor debt is paid up, request the return of your cheque and keep it in the same file and update your cheque folio accordingly by recording the same information. If their policy is not to return original cheques, request an official letter on their letterhead confirming that the cheque cannot be returned according to their policy, that it is null and void and that your liability to their company is fully paid.

9.     Soon as you are notified via sms by your bank that a cheque has been presented ensure you have sufficient funds to meet that cheque amount. If not and your funds deposits are late, call your bank to request them to hold the cheque and mention your proof of funds you are awaiting and the date if possible. Many times they will accommodate your request for a day maximum.

10.     If you know prior that you will not meet that cheque payment, arrange to meet with your creditor face to face, NOT over the phone and request an extension mentioning your reason, which must be the truth and nothing less. Most times they will approve but take heed not to take advantage of their extenstion, because they could end up eventually banking your cheque, which will then bounce and be classified as a ‘bounced or returned cheque’.

11.     If you ignored the cheque being presented then let me warn you don’t ignore the bouncing or returning action of that cheque. Go and meet your creditor immediately, not tomorrowbut today, no matter how busy you are as you will have to put busy on the side when you face legal action, because then there are no excuses. It is a matter of ‘is this your cheque and is this your signature?’ Period.

12.     Explain your situation to your creditor and try to resolve the problem amicably and here I could present many examples, but the situations vary so much it would be difficult to do so. Most are common solutions, you just need to find the right one for you and your situation and again, ensure that whatever you propose for your creditors approval, is in line with your ability to meet that payment as second chances are rare.

I will not even go into the subject of legal action for bounced cheques for the sole reason that any problem, even a bounced cheque problem can be resolved amicably between debtor and creditor if you act immediately.

Don’t tarry as you normally do by delaying the relevant action, because this problem will snowball into something you don’t wish to face.

You always have the power to find a solution, just be authentic when you meet with your creditor, present proof of your request and show humility.

Don’t go acting smart to accuse the creditor of presenting and bouncing your cheque because if you read the fine print of your contract, you will find the creditor acted within their rights and you agreed.

The key in any of these situations is to acknowledge your faults, ask for leniency, beg and plead if you must, because at the end it will be worth your while and you would have saved yourself a situation that many people face because they ignore the call of responsibility, integrity and credibility.

Once the damage is done many people cry wolf with ‘nobody told me, I didn’t know the cheque was presented or bounced... etc...’ the excuses are wild but not tangible as they are only excuses, because you know when cheques bounce, you are also are aptly informed prior when cheques will be presented to your bank.

Factually, there is no excuse in the book but to act responsible when you face this problem, because you only have yourself to blame.
 
[Note 1:  Theda Muller is a UAE-based author of two books. She also conducts webinars and workshops on debt recovery and recently launched a company in Dubai to support debtors]

[Note 2: The views expressed are the author’s own and do not reflect in any way, the views of Emirates 24|7. Readers are advised to carry out their own due diligence before taking any decision.]

 

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