IC 26-2-7
Chapter 7. Penalties for Stopping Payments or Permitting
Dishonor of Checks and Drafts
IC 26-2-7-1 Check
Sec. 1. As used in this chapter, "check" includes a draft. As added by P.L.42-1993, SEC.18.
IC 26-2-7-2 Financial institution
Sec. 2. (a) As used in this chapter, .financial institution. refers to
a financial institution (as defined in IC 28-1-1-3).
(b) The term does not include a person licensed under IC 24-4.5. As added by P.L.42-1993, SEC.18. Amended by P.L.10-2006, SEC.24
and P.L.57-2006, SEC.24; P.L.213-2007, SEC.33; P.L.217-2007,
SEC.31.
IC 26-2-7-3 Notice of nonpayment
Sec. 3. For purposes of this chapter, notice that a check has not
been paid by a financial institution is considered as having been
given at the time that the notice was deposited in the regular United
States mail, if the notice was addressed to either of the following:
(1) The address printed on the check.
(2) The address given by the person in writing to the payee or
holder at the time the check was issued or delivered. As added by P.L.42-1993, SEC.18.
IC 26-2-7-4 Liability for stopping payment or permitting dishonor of checks
Sec. 4. Subject to section 8 of this chapter, a person found liable
under other applicable law is liable under this chapter to the holder
of a check if the person executed and delivered the check to another
person drawn on or payable at a financial institution and the person
does either of the following:
(1) Without valid legal cause stops payment on the check.
(2) Allows the check to be dishonored by a financial institution
because of any of the following:
(A) Lack of funds.
(B) Failure to have an account.
(C) Lack of an authorized signature of the drawer or a
necessary endorser. As added by P.L.42-1993, SEC.18.
IC 26-2-7-5 Extent of liability for stopping payment or permitting dishonor of
checks
Sec. 5. A person liable under section 4 of this chapter is also
liable for all of the following:
(1) Interest at the rate of eighteen percent (18%) per annum on
the face amount of the check from the date of the check's
execution until payment is made in full.
(2) Court costs incurred in prosecuting an action that may be
brought by the holder to collect on the check.
(3) Reasonable attorney's fees incurred by the holder if the
responsibility for collection is referred to an attorney who is not
a salaried employee of the holder. If legal action is filed to
effect collection and the collection on the check is referred to an
attorney who is not a salaried employee of the holder, the
holder of the check is entitled to minimum attorney's fees of not
less than one hundred dollars ($100).
(4) Actual travel expenses not otherwise reimbursed under
subdivisions (1) through (3) and incurred by the holder to do
either of the following:
(A) Have the holder or an employee or agent of the holder
file papers and attend court proceedings related to the
recovery of a judgment under this chapter.
(B) Provide witnesses to testify in court proceedings related
to the recovery of a judgment under this chapter.
(5) A reasonable amount to compensate the holder for time used
to do either of the following:
(A) File papers and attend court proceedings related to the
recovery of a judgment under this chapter.
(B) Travel to and from activities described in clause (A).
(6) Actual direct and indirect expenses incurred by the holder
to compensate employees and agents for time used to do either
of the following:
(A) File papers and attend court proceedings related to the
recovery of a judgment under this section.
(B) Travel to and from activities described in clause (A).
(7) All other reasonable costs of collection. As added by P.L.42-1993, SEC.18.
IC 26-2-7-6 Liability for continued nonpayment of checks
Sec. 6. (a) This section does not apply to a person who has
allowed a check to be dishonored because of lack of funds if both of
the following apply:
(1) The person reasonably believed that there were sufficient
funds in the account to cover the check.
(2) The insufficiency of funds is caused by the dishonoring of
a third party check that had been deposited into the person's
account.
(b) If a person liable under this chapter does not pay to the holder
the full amount of the check not more than thirty (30) days after the
certified mailing of written notice that the check has not been paid,
the person is liable for, and the court shall award judgment for, the
following, whichever applies:
(1) If the face amount of the check is not greater than two
hundred fifty dollars ($250), three (3) times the face amount of
the check.
(2) If the face amount of the check is greater than two hundred
fifty dollars ($250), the face amount of the check plus five
hundred dollars ($500). As added by P.L.42-1993, SEC.18.
IC 26-2-7-7 Election of remedies
Sec. 7. A person must elect whether to pursue a claim either under
this chapter or under IC 34-24-3-1 (or IC 34-4-30-1 before its repeal). As added by P.L.42-1993, SEC.18. Amended by P.L.1-1998,
SEC.138.
IC 26-2-7-8 Exemption from liability for permitting dishonor of checks
Sec. 8. (a) A person who has allowed a check to be dishonored is
not liable under this chapter if, not more than ten (10) days after the
holder has given notice that the check has not been paid by the
financial institution, the person pays to the holder the full amount of
the check.
(b) A payment made under subsection (a) is effective for all
purposes as of the date the payment is made. As added by P.L.42-1993, SEC.18.
IC 26-2-7
Chapter 7. Penalties for Stopping Payments or Permitting
Dishonor of Checks and Drafts
IC 26-2-7-1 Check
Sec. 1. As used in this chapter, "check" includes a draft. As added by P.L.42-1993, SEC.18.
IC 26-2-7-2 Financial institution
Sec. 2. (a) As used in this chapter, .financial institution. refers to
a financial institution (as defined in IC 28-1-1-3).
(b) The term does not include a person licensed under IC 24-4.5. As added by P.L.42-1993, SEC.18. Amended by P.L.10-2006, SEC.24
and P.L.57-2006, SEC.24; P.L.213-2007, SEC.33; P.L.217-2007,
SEC.31.
IC 26-2-7-3 Notice of nonpayment
Sec. 3. For purposes of this chapter, notice that a check has not
been paid by a financial institution is considered as having been
given at the time that the notice was deposited in the regular United
States mail, if the notice was addressed to either of the following:
(1) The address printed on the check.
(2) The address given by the person in writing to the payee or
holder at the time the check was issued or delivered. As added by P.L.42-1993, SEC.18.
IC 26-2-7-4 Liability for stopping payment or permitting dishonor of checks
Sec. 4. Subject to section 8 of this chapter, a person found liable
under other applicable law is liable under this chapter to the holder
of a check if the person executed and delivered the check to another
person drawn on or payable at a financial institution and the person
does either of the following:
(1) Without valid legal cause stops payment on the check.
(2) Allows the check to be dishonored by a financial institution
because of any of the following:
(A) Lack of funds.
(B) Failure to have an account.
(C) Lack of an authorized signature of the drawer or a
necessary endorser. As added by P.L.42-1993, SEC.18.
IC 26-2-7-5 Extent of liability for stopping payment or permitting dishonor of
checks
Sec. 5. A person liable under section 4 of this chapter is also
liable for all of the following:
(1) Interest at the rate of eighteen percent (18%) per annum on
the face amount of the check from the date of the check's
execution until payment is made in full.
(2) Court costs incurred in prosecuting an action that may be
brought by the holder to collect on the check.
(3) Reasonable attorney's fees incurred by the holder if the
responsibility for collection is referred to an attorney who is not
a salaried employee of the holder. If legal action is filed to
effect collection and the collection on the check is referred to an
attorney who is not a salaried employee of the holder, the
holder of the check is entitled to minimum attorney's fees of not
less than one hundred dollars ($100).
(4) Actual travel expenses not otherwise reimbursed under
subdivisions (1) through (3) and incurred by the holder to do
either of the following:
(A) Have the holder or an employee or agent of the holder
file papers and attend court proceedings related to the
recovery of a judgment under this chapter.
(B) Provide witnesses to testify in court proceedings related
to the recovery of a judgment under this chapter.
(5) A reasonable amount to compensate the holder for time used
to do either of the following:
(A) File papers and attend court proceedings related to the
recovery of a judgment under this chapter.
(B) Travel to and from activities described in clause (A).
(6) Actual direct and indirect expenses incurred by the holder
to compensate employees and agents for time used to do either
of the following:
(A) File papers and attend court proceedings related to the
recovery of a judgment under this section.
(B) Travel to and from activities described in clause (A).
(7) All other reasonable costs of collection. As added by P.L.42-1993, SEC.18.
IC 26-2-7-6 Liability for continued nonpayment of checks
Sec. 6. (a) This section does not apply to a person who has
allowed a check to be dishonored because of lack of funds if both of
the following apply:
(1) The person reasonably believed that there were sufficient
funds in the account to cover the check.
(2) The insufficiency of funds is caused by the dishonoring of
a third party check that had been deposited into the person's
account.
(b) If a person liable under this chapter does not pay to the holder
the full amount of the check not more than thirty (30) days after the
certified mailing of written notice that the check has not been paid,
the person is liable for, and the court shall award judgment for, the
following, whichever applies:
(1) If the face amount of the check is not greater than two
hundred fifty dollars ($250), three (3) times the face amount of
the check.
(2) If the face amount of the check is greater than two hundred
fifty dollars ($250), the face amount of the check plus five
hundred dollars ($500). As added by P.L.42-1993, SEC.18.
IC 26-2-7-7 Election of remedies
Sec. 7. A person must elect whether to pursue a claim either under
this chapter or under IC 34-24-3-1 (or IC 34-4-30-1 before its repeal). As added by P.L.42-1993, SEC.18. Amended by P.L.1-1998,
SEC.138.
IC 26-2-7-8 Exemption from liability for permitting dishonor of checks
Sec. 8. (a) A person who has allowed a check to be dishonored is
not liable under this chapter if, not more than ten (10) days after the
holder has given notice that the check has not been paid by the
financial institution, the person pays to the holder the full amount of
the check.
(b) A payment made under subsection (a) is effective for all
purposes as of the date the payment is made. As added by P.L.42-1993, SEC.18.
IC 26-2-7
Chapter 7. Penalties for Stopping Payments or Permitting
Dishonor of Checks and Drafts
IC 26-2-7-1 Check
Sec. 1. As used in this chapter, "check" includes a draft. As added by P.L.42-1993, SEC.18.
IC 26-2-7-2 Financial institution
Sec. 2. (a) As used in this chapter, .financial institution. refers to
a financial institution (as defined in IC 28-1-1-3).
(b) The term does not include a person licensed under IC 24-4.5. As added by P.L.42-1993, SEC.18. Amended by P.L.10-2006, SEC.24
and P.L.57-2006, SEC.24; P.L.213-2007, SEC.33; P.L.217-2007,
SEC.31.
IC 26-2-7-3 Notice of nonpayment
Sec. 3. For purposes of this chapter, notice that a check has not
been paid by a financial institution is considered as having been
given at the time that the notice was deposited in the regular United
States mail, if the notice was addressed to either of the following:
(1) The address printed on the check.
(2) The address given by the person in writing to the payee or
holder at the time the check was issued or delivered. As added by P.L.42-1993, SEC.18.
IC 26-2-7-4 Liability for stopping payment or permitting dishonor of checks
Sec. 4. Subject to section 8 of this chapter, a person found liable
under other applicable law is liable under this chapter to the holder
of a check if the person executed and delivered the check to another
person drawn on or payable at a financial institution and the person
does either of the following:
(1) Without valid legal cause stops payment on the check.
(2) Allows the check to be dishonored by a financial institution
because of any of the following:
(A) Lack of funds.
(B) Failure to have an account.
(C) Lack of an authorized signature of the drawer or a
necessary endorser. As added by P.L.42-1993, SEC.18.
IC 26-2-7-5 Extent of liability for stopping payment or permitting dishonor of
checks
Sec. 5. A person liable under section 4 of this chapter is also
liable for all of the following:
(1) Interest at the rate of eighteen percent (18%) per annum on
the face amount of the check from the date of the check's
execution until payment is made in full.
(2) Court costs incurred in prosecuting an action that may be
brought by the holder to collect on the check.
(3) Reasonable attorney's fees incurred by the holder if the
responsibility for collection is referred to an attorney who is not
a salaried employee of the holder. If legal action is filed to
effect collection and the collection on the check is referred to an
attorney who is not a salaried employee of the holder, the
holder of the check is entitled to minimum attorney's fees of not
less than one hundred dollars ($100).
(4) Actual travel expenses not otherwise reimbursed under
subdivisions (1) through (3) and incurred by the holder to do
either of the following:
(A) Have the holder or an employee or agent of the holder
file papers and attend court proceedings related to the
recovery of a judgment under this chapter.
(B) Provide witnesses to testify in court proceedings related
to the recovery of a judgment under this chapter.
(5) A reasonable amount to compensate the holder for time used
to do either of the following:
(A) File papers and attend court proceedings related to the
recovery of a judgment under this chapter.
(B) Travel to and from activities described in clause (A).
(6) Actual direct and indirect expenses incurred by the holder
to compensate employees and agents for time used to do either
of the following:
(A) File papers and attend court proceedings related to the
recovery of a judgment under this section.
(B) Travel to and from activities described in clause (A).
(7) All other reasonable costs of collection. As added by P.L.42-1993, SEC.18.
IC 26-2-7-6 Liability for continued nonpayment of checks
Sec. 6. (a) This section does not apply to a person who has
allowed a check to be dishonored because of lack of funds if both of
the following apply:
(1) The person reasonably believed that there were sufficient
funds in the account to cover the check.
(2) The insufficiency of funds is caused by the dishonoring of
a third party check that had been deposited into the person's
account.
(b) If a person liable under this chapter does not pay to the holder
the full amount of the check not more than thirty (30) days after the
certified mailing of written notice that the check has not been paid,
the person is liable for, and the court shall award judgment for, the
following, whichever applies:
(1) If the face amount of the check is not greater than two
hundred fifty dollars ($250), three (3) times the face amount of
the check.
(2) If the face amount of the check is greater than two hundred
fifty dollars ($250), the face amount of the check plus five
hundred dollars ($500). As added by P.L.42-1993, SEC.18.
IC 26-2-7-7 Election of remedies
Sec. 7. A person must elect whether to pursue a claim either under
this chapter or under IC 34-24-3-1 (or IC 34-4-30-1 before its repeal). As added by P.L.42-1993, SEC.18. Amended by P.L.1-1998,
SEC.138.
IC 26-2-7-8 Exemption from liability for permitting dishonor of checks
Sec. 8. (a) A person who has allowed a check to be dishonored is
not liable under this chapter if, not more than ten (10) days after the
holder has given notice that the check has not been paid by the
financial institution, the person pays to the holder the full amount of
the check.
(b) A payment made under subsection (a) is effective for all
purposes as of the date the payment is made. As added by P.L.42-1993, SEC.18.
