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Bounced, Returned or NSF Checks in Pennsylvania

Bouncing a check is a criminal offense in Pennsylvania. Under 18 Pa.C.S.A. Section 4105(a), “A person commits an offense if he issues or passes a check . . . knowing that it will not be honored by the drawee.” The “drawee” is the bank, credit union or other institution holding the account against which the check is drawn. The crime includes instances where the account lacks funds or the person who wrote the check did not have an account at the institution (Sections 4105(b)(ii) and (i), respectively). The penalty for bouncing a check in the Commonwealth ranges from a summary offense (the least serious) for checks less than $200 to a felony (the most egregious) for checks of $75,000 or more.

Most bounced checks are issued for the purpose of making a relatively inexpensive purchase or paying a bill, and not for purchasing a luxury RV or one of Elvis’s jumpsuits. Consequently, criminal charges brought under Section 4105 are ordinarily of the summary or misdemeanor of the third degree (check of less than $500) variety, the penalty for which usually requires restitution – or repayment of the check amount plus costs – rather than jail time.

People considering a bankruptcy filing frequently have been in a state of financial crisis for a prolonged period before seeking legal assistance. As a result, it is not uncommon for those same people to have, knowingly or unknowingly, passed a bad check along the way. When a bankruptcy petition is filed an “automatic stay” takes effect under Section 362 of the Bankruptcy Code. Among other actions, under subsection (a)(6) the automatic stay prohibits creditors from “any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case”. However, since it is obvious that burglars and other criminals should not be able to use a bankruptcy filing to avoid criminal prosecution, Section 362(b)(1) excepts from the automatic stay “the commencement or continuation of a criminal action or proceeding against the debtor”. Therein lies the problem with actions brought by creditors to recover the amount of bounced checks – Are they “an act to collect” which is prohibited under Section 362(a)(6) or a “criminal action or proceeding” pursuant to Section 362(b)(1)?

Depending upon the jurisdiction and circumstances of the matter at hand, bankruptcy courts have held that criminal prosecutions for returned checks are both: (1) excepted from the automatic stay under 362(b)(1) and may continue; and (2) prohibited by 362(a)(6) and must be terminated. The key to whether or not a creditor’s attempt to seek criminal charges against someone who has filed for bankruptcy runs afoul of the automatic stay may depend upon the court’s determination of the creditor’s true intent for pursuing the charges, seeking justice or receiving payment, with the latter potentially being an inappropriate effort at collection against someone who has filed for bankruptcy. In addition, the timing of the criminal charges may be important, with a criminal complaint being filed prior to a bankruptcy filing perhaps being permitted to continue, but criminal charges brought after receiving notice of bankruptcy filing possibly being a violation of 362(a)(6).

An attorney in the jurisdiction where the debt arose is in the best position to help determine whether a bankruptcy filing can protect against criminal charges being brought for a check returned for insufficient funds. The best protection against such an action is course not writing a check your bank cannot cash.

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