Understanding the situation
A cheque instructs a bank to pay a stated amount to the holder. If the account cannot cover it, or there is another issue with the instrument, the bank returns it and records the reason. That moment changes the position of both parties: the holder has not been paid, and the issuer has an instrument outstanding in their name.
What follows is shaped by the reason for return, the relationship between the parties and whether the underlying obligation is disputed.
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If you are the holder
- Keep the original cheque and the return memo.
- Contact the issuer in writing and record the response.
- Consider a formal demand or legal notice if informal contact does not lead to payment.
- Take advice on whether a court-based route is appropriate for your amount and documents.
If you issued the cheque
- Do not ignore the situation — unpaid cheques rarely resolve themselves.
- Communicate with the holder and, where possible, agree a documented payment plan.
- Keep proof of every payment made toward the amount.
- Seek advice promptly if you receive a notice or court document, as procedures may have time limits under the applicable law.
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