Methods of Check Collection

Methods of Check Collection

Legal disputes involving checks and dishonored checks are among the most common legal challenges in society. Many individuals encounter such issues, particularly because checks are often issued with a deferred payment date. This frequently gives rise to disputes over payment claims and enforcement procedures, particularly in cases involving dishonored checks.

Criminal Prosecution of Dishonored Checks

In general, there are three primary methods for collecting payment on a check:

• Enforcement through registration execution procedures.
• Civil litigation.
• Criminal prosecution.

Request for Issuance of Enforcement Order Through Registration Authorities

Application for Enforcement Order

Pursuant to Article 2 of the Check Issuance Law, and considering that checks are legally enforceable instruments, the holder of a check may seek recovery of the check amount if the check is presented to the drawee bank and payment is refused in whole or in part for insufficient funds or any other reason.

To request an enforcement order, the check holder must submit a printed application form consistent with the official template, the original check, copies of the check, and the bank’s certificate of non-payment to the relevant registration authority. An enforcement order will be issued only if the bank certifies that the signature on the check matches the issuer’s authorized signature.

The check holder refers to the individual in whose favor the check is issued, the person to whom the check is endorsed, the bearer of the check, or their legal successor.

Advantages and Disadvantages of Enforcement Through Registration Authorities

Disadvantages of Enforcement Through Registration Authorities

Despite the relatively faster procedure and shorter execution time through registration enforcement, many check holders prefer judicial proceedings. The reasons include:

• Under the Financial Convictions Enforcement Law, if a debtor fails to pay a monetary obligation, courts may order payment, seize assets, and, in certain circumstances, impose imprisonment if the debtor is not insolvent. Registration enforcement authorities do not have the power to impose imprisonment.
• The cost of enforcement through registration authorities is approximately 10 percent of the claimed amount, which is significantly higher than court filing fees, which generally range from 1.5 percent to 2 percent. Although the debtor is responsible for this cost, if the applicant cannot identify any assets of the debtor, the registration authority may require payment of the enforcement fee before returning the original check.
• Registration enforcement is limited to actions against the check issuer and does not extend to other liable parties, whereas judicial proceedings may include all responsible parties.
• Some courts interpret withdrawal from criminal prosecution as evidence that the holder has chosen registration enforcement.

Advantages of Collecting Checks Through Registration Authorities

• Faster processing, as enforcement orders may be issued within approximately forty-eight hours.
• No requirement to prove the underlying debt, since a check is considered an enforceable document.
• No requirement to pay court fees at the initial stage, as enforcement costs are collected after payment recovery.
• The enforcement process is subject to a six-month limitation period.

Recovery of Check Amount Through Criminal Proceedings

Under amendments to the Check Collection Law enacted in 2003, a check holder may initiate criminal proceedings against the issuer after obtaining a certificate of non-payment from the bank. Criminal prosecution requires compliance with statutory time limits, including:

• The check holder must present the check to the bank within six months from the issuance date
• After receiving the certificate of non-payment, the holder must file a criminal complaint within six months

Failure to meet these deadlines will preclude criminal prosecution.

Filing a Civil Lawsuit

Regardless of other available methods, the check holder may file a civil claim against the check issuer. This requires submitting a formal petition to the Civil Courts in accordance with the procedural requirements of the civil procedure laws.

Frequently Asked Questions About Methods of Check Collection