A bounced check is one written without the funds in the bank to honor it. A bad check is a bounced check that you do not intend to honor. Bad checks are left unpaid, while bounced checks are paid in a timely manner. The Indiana laws on writing bad checks do not apply to those bounced checks, but to bad checks and those written on closed accounts or with forged signatures. Be aware that a bounced check you intended to pay will become a bad check if it is not paid within 10 days of being dishonored.
Bad checks written on an open account, with no other evidence of fraud, can have stiff penalties. You will receive notice once the check is dishonored, or returned by the bank. Once the notice is sent, you have 30 days to dispute or pay the bad check and fees. After the 30-day period, the person receiving the check can sue you and receive a civil penalty.
Criminal charges apply if the check is written on a closed account, is a fake check or is written with a forged signature. Once such a situation is discovered, the check receiver can contact the prosecuting attorney's office in his area to file criminal charges. Depending on the amount of the check, the writer may be charged with a felony.
Bad checks are also created when you call a bank to stop payment on the check before it could be cashed. If there is no valid reason for the stop-payment, you can be sued for not honoring the check.
The penalty for a bad check is a fine. The fine consists of three times the amount of the original check ($500 maximum and only for checks that are less than $250), $100 or more in attorney's fees and 18 percent interest for every year that the check is left unpaid. Criminal charges can be a fine of up to $5,000 or less than a year in jail. Depending on the case, the judge may levy both penalties at the same time. Fees for traveling to court and the employees costs for taking a day out of work to testify may also become part of the penalty.