In the economics that we currently live in, many persons that write checks to small businesses know that business owners will never try to collect…it is simply not cost effective. However, under Michigan law, a small business owner may send the debtor on a check for insufficient funds (NSF) a demand letter with certain statutory language. A debtor is then liable on the NSF check if the debtor fails to pay in cash the amount of the dishonored check plus either (a) a $25 processing fee, if within 7 days after the demand letter was mailed, or (b) a $35 processing fee, if within 30 days after the demand letter was mailed. If the debtor fails to make such payment and is found responsible for payment in a civil action, the creditor is liable for (1) the full amount of the check; (2) civil damages of twice the amount of the dishonored check, draft, or order, or $100, whichever is greater; and (3) costs of $250.MCL 600.2952(4). This provision does not apply if, before the trial of an action brought under this section, the debtor pays to the creditor, in cash, the full amount of the dishonored check, a processing fee of $35, and reasonable costs not exceeding $250, as agreed to by the parties. MCL 600.2952(5).
So, if someone owes you money as a small business and the debtor bounces a check, do not give up. It may be well worth your time and investment to pursue collection.