Texas Hot Check Law And Bankruptcy
Writing Bad Checks in Texas
A hot check is a check that a bank cannot pay because there are insufficient funds in the account to pay the check or the checking account does not exist at all. It does not matter how nominal the check is because in Texas writing a bad check is a misdemeanor. Depending on the amount of the bad check and the circumstances of the issuance of a bad check, writing a bad check can be a felony.
A knowledgeable lawyer can look at your bad check and bankruptcy situation and offer legal advice for your particular case.
Can filing for bankruptcy stop prosecution for a bad check?
Filing bankruptcy cannot stop prosecution for your bad check if the prosecution is by a District attorney, Attorney General or any law enforcement authority. A bankruptcy often stops your creditors from attempting to collect debt from you. This includes creditors holding or collecting on bad checks or what some call:
- Bounced checks
- Dishonored checks
- Hot checks
- Rubber Checks
- Worthless checks or more.
Bankruptcy law imposes “the automatic stay” when a bankruptcy petition is filed. This is an injunction against all collection actions, and it also prohibits any collection efforts on debts that came before the bankruptcy filing. But “automatic stay” cannot stop proceedings by the state or Federal government agency with police powers.
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The bankruptcy court considers court prosecutions on bad checks as criminal proceedings. This is because a bad check prosecution is not seen as an attempt to pressure a debtor to pay their debt.
Who can charge you with a crime for writing postdated checks?
Any state or Federal government agency with police powers can charge you criminally. The district attorney or Attorney general can also prosecute you. But if say you have been writing postdated checks to payday loan companies, the companies cannot prosecute you.
All they can do is make recommendations to the District Attorney, Attorney general or governmental agency with police powers that you should be prosecuted. But that depends on the nature of your case. They may attempt to file a lawsuit against you to lift the “automatic stay” but such lawsuits rarely succeed and are rarely filed.
Payday Loan Companies & Hot Checks
They can deposit the check but if they do that after being notified about the bankruptcy filing, it can be considered as a violation of automatic stay. However, many auto drafts and other ACH debits can still be processed if the money is available. Properly notifying all your creditors about your filing stops your account from being debited, and stops outstanding checks from going through.
Is it possible to discharge debts owed for bad checks?
Whether such debts can be discharged or not depends on the facts of each case. Generally, if there was no fraud, false pretenses and other illegal stuff involved in the writing of the check, then the debt can be discharged.
A lawyer can help you with bad checks before you file for bankruptcy and help you deal with your bad checks if you are eligible to file for bankruptcy.