Definition

• Indiana considers a check to be dishonored if any of these three conditions are met: Lack of funds, failure to have an account, or lack of an authorized signature of the drawer or a necessary endorser. A bad check may be criminally prosecuted either as a felony with a maximum -three year jail sentence and a $10,000 fine, or as a misdemeanor with a one-year jail sentence and a $5,000 fine.
  
  

Civil Penalties

• Anyone found civilly liable for writing a bad check is also liable for 18 percent interest per annum on the face amount of the check from the time executed to payment in full; court costs for collection; reasonable collection of attorney fees; and travel expenses. Direct and indirect employee expenses for time spent in collections and all other reasonable costs may also be assumed by the writer of the bad check.
  
  

Mitigating Circumstances

• Action may not necessarily be brought against a person who writes a bad check because of lack of funds if he reasonably believed there were sufficient funds or if he had insufficient funds because of the actions of a third-party check issuer.
  
  

Court Judgment

• The holder of a bad check has 30 days after proper notification to file a claim. Judgment may be three times the face amount of the check if it's less than $250, or the face amount of the check plus $500 if it's more than $250.
  
  Payment in full within 10 days after notice will relieve the writer from all further state penalties.
  
  

Bad Check Charge

• Indiana state statute allows merchants to charge a bad check writer a $27.50 fee per bad check, or 5 percent of the check up to $250.