Should These Checks Have Been Returned?

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Question:

A client made a deposit of three checks on July 31st. The company who wrote the checks filed for bankruptcy on August 10th. Two of these checks have been returned three weeks later with stop payments placed on them. We've debited the client's account. Is this right? I thought checks should be returned within one day after presentment per Reg CC. Should those checks have been returned?

Answer:

Three weeks seems excessive for a timely return of the checks you've described. Stopped checks are subject to the same midnight rule that applies to insufficient funds, unauthorized signature, etc. The bankruptcy filing does not change that fact. I recommend that you enter a claim of late return, using the procedures applicable to your clearing house association or the Federal Reserve Bank, depending on how the check was returned to you.

First published on BankersOnline.com 9/24/07