If there isn't enough money in your checking account to cover the checks that you've written, your check is considered a "Non-Sufficient Funds" (NSF) by your bank. Sometimes, your bank may decide to pay the check anyway and just charge you a fee. Your bank is also at liberty, however, to charge you the fee but not pay the amount of your check to its payee (or its bank). When this happens, your check is said to "bounce" and it will be returned to the payee. At this point, the payee will probably contact you about making good on the check.
Both state and local laws address the issue of bad checks. In some cases, these laws require your payee to contact you about paying your debt before they can file criminal charges against you. If, however, the check was for a lot of money, or you have a history of writing bad checks, the law may allow the payee to immediately go to the police. If this happens, you may be arrested and end up convicted of check fraud.
Civil Law Consequences
Individuals and businesses can take you to court over a bounced check and in many places can sue you for double, or even triple the value of the check. You may also be sued for damages, such as bank fees incurred by the check recipient. Lawsuits and money judgments are a matter of public record, so this information will be available to anyone who examines court records, including credit bureau and background check employees.
Consumer and Credit Reports
If you are convicted of check fraud, you will have a criminal record that can show up on employment background checks. In cases where the check payee sues you, a record of the lawsuit and judgment can stay on your credit report for up to seven years after you pay off the debt, or until your state's statute of limitations runs out on the collection of unpaid judgments if you don't pay the amount you owe. If you repeatedly bounce checks or your bank closes your account, this information can appear on specialty consumer reports intended to help banks make decisions about opening accounts for new customers. The presence of such negative information on your banking reports can make it very difficult for you to work with banks in the future.