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August 2009 - When replacing a returned-cheque get the cheque back

When replacing a returned-cheque get the cheque back

☳ by Adam Aspilla

With the advancement of technology, there are various ways of paying our debts. Aside from our normal ways of paying cash or cheque, we can pay our debts through online banking, bank to bank, interact, money order, bank draft, credit cards, and many more.

Despite the many ways of paying our debts, we could not let go of paying by cheque because of its advantages: it is convenient and the cancelled cheque (cheque paid by the bank) is a proof of payment. 

However, there are also disadvantages – when your cheque bounced or returned by your bank for whatever reason. It may be Not Sufficient Funds (NSF) or your deposit is not yet cleared. When your cheque bounces –NSF, it would be costly, for you will pay a bank charge of $25.00 or more depending on bank’s policy. Not only that, it could in a way adversely affect your credit rating at least on the bank you are banking.

Moreover, the payee (the person whom the cheque is payable) would not be happy and would demand a cash replacement for the returned-cheque plus whatever the bank charge for a bounced- cheque deposit.

When you replace your returned-cheque you should get it back or to let the payee sign a receipt of the amount for the replacement.

You might think that a receipt is not necessary because the payee is your friend. You have to know, that in this world there is no such thing as permanent friends and permanent enemies. This is even true to your siblings. 

A good example was a retired woman who borrowed money from her close friend. She issued a post-date cheque. When the cheque was deposited on the due date, after a week it was returned - NSF. The retired woman replaced the returned-cheque with cash and did not bother to get it back, thinking that it was not necessary for she trusted her close friend.

After few months her friend, again, demanded payment of the returned-cheque. The retired woman reasoned out that she already replaced it with cash. Her closed friend told her, if it was replaced, how come she still has the returned-cheque in her possession. She asked the retired woman if she (the payee) signed a receipt for the cash replacement. Unfortunately the retired woman did not have any because of her trust.

The payee brought the matter to the small claim court. The retired woman did not able to show any evidence to the judge that she really replaced the returned-cheque with cash. But just before the judge rendered his verdict, the retired woman showed to the judge her diary indicating the date and the cash amount she paid to the payee.

Fortunately for her, the judge considered her age and her consistency on her argument, and the judgment was rendered in her favor. Without her diary she could have paid the same debt twice plus cost.

The lesson here is when you replaced your returned-cheque, get it back or let the payee sign an acknowledgement receipt even if the payee is your close friend for there is no such thing as permanent friends or enemies.

Incidentally, the writer is inviting you to attend his two-day Free seminar on “Financial Management” sponsored by Word Became Flesh Ministries on Saturdays November 7 & 14 at 2:15 P.M. at 224 Mill Street Brampton, L6Y 1T8

Some of the things you will learn in this seminar: the importance of family budget, how to prepare a family budget, ways of improving your cash flow, the difference between man’s way and God way of managing your finances .

To register visit www.wbfmfamily.com or call 905 452 7708.



Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.