Bounced Check

Categories: Ethics/Morals, Banking

When you write a check but don't have enough money in the bank for the receiver of the check to cash it, the check bounces. That means it's no good: there's not enough money in your account to cover the amount on the check. When this happens, your bank will charge you a bunch of extra fees... and whoever you wrote the check to will be grumpy as all get out.

Example

Louis finds a sweet gaming system at a local store for $300. What's even more amazing is that the store accepts checks (most in the mall don't). Even though Louis doesn't have $300 in his wallet, he writes a check and gets the gaming system home. Only one problem: Louis only has $100 in his account. The bank returns the check to the store, saying there's not enough money. They charge Louis an extra fee and the store calls him to tell him he has to pay up some other way.

Related or Semi-related Video

Finance: What is Bankruptcy?260 Views

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Finance a la' Shmoop what is bankruptcy well in the old days

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this was bankruptcy you'd go to prison if you couldn't pay your bills and [People in prison for bankruptcy]

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unfortunately there weren't and still aren't a lot of legal high wage earning

00:19

opportunities in prison working your way out of debt on the chain gang wasn't [Prisoners working outside]

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really a thing back then so instead the burden would be on your family to pay

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back the loan you'd promised to pay back and didn't ugly situation it paved the [Officer knocking on a prisoners family member to pay their debts]

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way for some well today bankruptcy has a range of flavors that it comes in but

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basically it exists as a legal vehicle to avoid the aforementioned situation a [Bankruptcy van driving]

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bankrupt person and/or corporation stands in front of a judge they turn

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their pockets inside out with a sad face and the judge then decide who will be [Person opens their pockets inside out in front of a judge]

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paid when and how much well how does she decide the order for who gets paid back

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when? well, it usually prioritizes employees and vendors owed a paycheck

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above banks who have made a loan and under that umbrella all different types

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of loans have different priorities if the bankrupt individual owns a home it's [bankrupt individual in his home on the toilet reading a newspaper]

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usually sold out from under him and anything left after paying off the

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mortgage is used to pay others even if you do survive a bankruptcy your credit

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is pretty much ruined who's going to want to loan you money once you've

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proven that you're not good with being loaned money yeah if you've defaulted in [a really low credit score chart for a bankrupt individual]

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the past on promises to pay people back why wouldn't you do the same thing again

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well remember that twenty dollars you loaned your buddy Eric that he never [Person loaning 20 dollars to friend Eric

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paid back well how eager are you going to be to hook him up with another twenty

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especially since you'd only be feeding his betting on frog fighting habit yeah [Eric betting money on frog fighting]

01:46

not so much so long Eric you'll get the help you need!

Find other enlightening terms in Shmoop Finance Genius Bar(f)