Michigan's Statute of Limitations on a Non-Sufficient Funds Check

Not everybody remembers a time when the only way to pay a bill, other than using cash, was to write a check. With the dawning of the age of technology, automatic fund transfers have become the norm and, in modern times, they are easy to handle for even those not entirely internet savvy. Companies like PayPal walk you through the process, making checks and checking accounts less important in our lives. But lots of people still use checks to pay bills, including rent to a landlord or monthly utilities. And that means that some people sometimes write checks without having enough funds in their account. If you write a check in Michigan that is returned for insufficient funds, you have a short window of time to make it good. If you don't, the consequences can be severe – check fraud is a felony in Michigan.

Just yesterday, it seems, checks were an essential part of an adult's financial life. As recently as 2014, adults in this country paid over 8 billion bills by check in an amount totaling $4.3 trillion. Today that amount is far less thanks to newer, easier ways to transfer money with the click of a key on your smart phone or computer.

In many ways, automatic fund transfers are safer than checks. Certainly, merchants have reason to prefer a bank or PayPal-type transfer, since they receive the funds at the same time as they receive notice of payment. It also eliminates the possibility of a bad check or a check lost in the mail or stolen from the mailbox.

Those writing checks could also expose themselves to fraud by others, since handwritten numbers on checks can be changed, and even the name of the person to whom the check is issued can be altered. The personal information about the owner of the account is also often written on a bank check. This can include a person's name, address, phone number and bank account information, and if the check is stolen, all of this information is likewise stolen.

But paper checks still exist, and people still use them to pay bills. That means that the problems associated with checks continue to exist as well. Different states take different approaches to dealing with bad or fraudulent checks, some imposing civil penalties, others criminal penalties. Michigan treats bad checks very seriously. Although it gives the bad-check writer a short period of time to make good on a check returned for insufficient funds, Michigan law also contains penalties for check fraud that may make some people think twice before they pick up the pen.

Think of a check as a written document containing a series of demands and promises. The check contains written instructions authorizing the bank to transfer a set amount of money to the person to whom the check is written, a written demand for money transfer. But that's not all. It also reassures the check writer by its implied promise that the bank account on which the check is drawn is a good account, that the check writer is legally authorized to use the account, and, finally, that there is enough money in the account to cover the amount of the check.

Despite all these demands and promises, many people who have written checks in the past or continue to write them in the present have made mistakes resulting in returned checks. If you don't have enough money in your account to pay a check when it comes in, the check may bounce. Now, a lot of people contract for overdraft protection to cover this type of issue, but many don't want to pay the extra fees; they assume that they will never bounce a check, but sometimes it happens.

The fact that a check gets get sent back for insufficient funds doesn't necessarily mean that the person is trying to defraud her creditor. If you make a deposit in the morning to cover a rent check, you think you are fine. But you may be depending on your financial institution to clear your deposit immediately. If the deposit hasn't cleared by the time your rent check hits that afternoon, it could be returned for insufficient funds. While this is technically your fault, and you will get hit with an NSF, or non-sufficent funds, charge by the bank, you obviously didn't intend this to happen.

Typically, states deal with this by giving the person writing a bad check a certain period of time to rectify the situation before legal action is taken. In Michigan, where the writing of a bad check can be charged as a felony, you do have a chance to make things right.

Read More: Law on Writing Bad Checks in Michigan

In Michigan, writing a bad check can be a felony, punishable by two years in prison and/or a fine of $200. The statute is found in the Michigan Penal Code at 750.131(a), entitled "Check, draft, or order for payment of money; making, drawing, uttering, or delivering without account, credit, or sufficient funds with intent to defraud; violation as felony; penalties."

That statute provides that a person is not permitted to make a check or draw an order for the payment of money to be transferred or applied to an account in certain situations. One of those situations is when, at the time the check is written or the order for payment of money is made, the person doesn't have an account with the bank or financial institution. If the person does this with intent to defraud, he can, in Michigan, be found guilty of a felony. The felony can be punished by imprisonment for not more than two years, and/or by a fine of not more than $500.

The statute also prohibits a person from making three or more checks or money orders within 10 days or drawing money from a bank account in certain circumstances. One of those circumstances is when the account in question does not have sufficient funds to cover the checks or money orders, and the person does not have other credit with the bank to cover them. This behavior is a felony, if the person knows at the time that she does not have enough money or credit to cover the checks. Again, this type of check fraud in Michigan is punishable by imprisonment for not more than two years, or by a fine of not more than $500, or both.

If you have written a bad check in Michigan, however, state law gives you a period of time to remedy the situation, a sort of grace period, albeit a short grace period. It is known as the five-day bad check notice in Michigan.

Laws in the state of Michigan provide a specific procedure for collecting bounced checks plus some penalties and costs. This begins when a check bounces, whether because it was written on a closed account or because of non-sufficient funds in the account. The person to whom the check was written is required by Michigan law to send a five-day bad check notice. A form is available online that informs the check writer of the situation and the law giving them five days to respond.

The five-day form must be sent by certified mail with return receipt requested to the person writing the check. If the person responds within that time period and makes good on the check within seven days from date of mailing, they only have to pay a fee of $25. If they aren't able to make good on the check in that time period but do clear it within 30 days, the fee is $35. If the person doesn't clear the check, they are liable under Michigan law for civil damages of up to twice the amount of the check, or $100, whichever is greater. They will also owe costs of $250. The person to whom the check was written can take them to small claims court.

Exactly what types of checks will trigger a criminal charge – potentially a felony – under Michigan law? Several types of check activity fall under the heading of check fraud. These include:

• Check kiting, where an individual deposits a check she knows will bounce to inflate the amount of money in the account, then hurries to cover the check before the fraud is discovered.
• A bounced check returned for insufficient funds and not covered by the person within the statutory period.
• A check written on an account that is no longer valid.
• A fraudulent check with a forged signature or changed money amount.

A statute of limitation is a law that requires that a legal action against someone be brought within a certain time period. For example, if you smash into someone's car, the law gives you a specific period of time – usually two years – to sue for property damage. That is called the statute of limitations and is not intended to let the person off the hook. Rather, statutes of limitations are intended to encourage people to go to court relatively quickly, while evidence is still fresh and witnesses can remember what happened. If you were able to bring the car accident case 20 years after it happened, the evidence and memories would definitely have faded, and the person you sue may not have a fair shake at proving what happened.

Statutes of limitations can apply to criminal prosecutions as well, although some capital offenses can be prosecuted whenever the criminal is discovered, even 50 years later. Check fraud, however, is not considered serious enough to fall within that category. Michigan prosecutors must bring a check fraud charge within six years from the date the bad check was written.

Note that in bringing an action for check fraud, like in any criminal case, the prosecutors have the burden of proof. That means that the person charged is innocent until proven guilty. The prosecutor must prove not just the fact that it was a bad check, but also that the person writing the check intended to commit fraud. If the check fraud charge is based on insufficient funds, prosecutors will have to show that the person writing the check knew at the time she wrote it that she did not have the funds and deliberately wrote it anyway.

Since the prosecution needs to prove that someone acted with intent to defraud before the person can be convicted of one of these bad check felonies, a person charged with check fraud in Michigan will not be convicted if bad intent is not established. Anyone charged with a felony will want to consult an attorney since a strong defense will be required.