My wife, Susan, believes in “the Money Fairy.”
That’s the little pixie who leaves change or a few bucks in your coat pocket, under the sofa cushions or in those old blue jeans in the dryer.
“A present from the Money Fairy” is as good an explanation as any for how people who don’t normally lose track of money find a few dollars unexpectedly.
But recently, for the first time, the Money Fairy left us a check. OK, so it was really a check from Pennsylvania Blue Shield for a medical expense reimbursement, a $45 payment made in 1993 that somehow got filed away with paperwork and forgotten.
Like any unexpected money, it felt like a nice little gift, with one small exception. Right there on the face of the check were these words: “Must be cashed within six months.” Oops.
I am not experienced at losing checks, but I know that plenty of people do. John, a reader in Colorado, recently sent me a letter describing how his family found dozens of uncashed checks when cleaning up his grandfather’s estate. The checks were more than 20 years old. And I have talked to plenty of corporate accounting types who have said that many dividend checks go uncashed for long stretches of time, as do a lot of those small-dollar product rebate checks.
My check represented found money. To my bank, however, it was a “stale check,” which means it was past the six months during which most checks must be honored (some business issuers cut the time a check is good down to as little as 60 days, instead of six months).
Cashing a stale check can be tricky. In these days of bank mergers, even the most active of long-time accounts can get new routing numbers that effectively void all checks, no matter when they were written. To get such a check cashed, all significant conditions–from the account number to the fact that the issuer is still around–must be the same as when the check was written; otherwise, the check will be returned.
Most states have adopted a provision of the Uniform Commercial Code, which states that a bank is not obligated to cash a check presented more than six months after the date it was written.
That doesn’t mean the check won’t go through. The old dates are easy to overlook, and while the check-writer’s bank has no obligation to pay the debt, bankers tend to make the assumption that the check writer wants to. Personal checks, which typically don’t carry expiration dates, may be paid for years, provided the account they were written on remains intact. Even the expiration dates on a check may not stop its processing unless the issuer has left special instructions with a bank to make sure the dates are adhered to strictly.
Companies put the expiration dates on checks for a number of reasons. It helps them clean up bank accounts, taking unpaid obligations off the books. And it allows them to avoid stop-payment fees when a customer calls up to say that a check has been lost.
“If you measure the age of the check in years, then you probably shouldn’t try putting it through,” says Paul Connolly, first vice president of the Federal Reserve Bank of Boston. “If the check is younger than that and if it was issued by a going concern, it will probably go through.”
Older checks, however, require more work. While you could try to cash them–the equivalent to running them up the flagpole to see if they fly–the likelihood of return makes that a poor option. Banks charge anywhere from $5 to $20 for returned items. Although stale checks are not necessarily bounced checks, the charges for having them returned can be just as onerous, and the Money Fairy isn’t around to pay those fees.
That means contacting the issuer, if possible. In my case, one call to Pennsylvania Blue Shield solved the problem. Had I simply cashed the check, it would not have cleared because the company is now Capital Blue Cross; luckily, my records remain on file. The company acknowledged still owing me for the claim, so it reissued my check upon receipt of the old one. (For my own protection, I kept a copy of the check, my correspondence and the name of the supervisor with whom I spoke.)
In the case of John, with his grandfather’s decades-old checks, contacting issuers is nearly impossible. Some of the checks were from individuals, others from companies and a few from the government. And he does not have any records to indicate why the money was owed and whether the accounts were ever settled.
That lack of information does not bode well for collecting.
Experts suggest that in a situation with many stale checks but little information, the checks break down into three groups: the definites, maybes and unlikelies. Government checks represent the former, corporate checks the middle group and personal checks the latter.
With official checks, there is a good chance of records–albeit possibly buried in archives somewhere–showing the transaction. That will make it easier to get a check reissued. And a government agency, unlike an individual, is unlikely to have moved or closed its bank account.
When it comes to stale corporate checks, it may be a matter of proving that the debt was never paid. A “lost” check may have been reported and reissued. If the check is then found years later, the debt has been paid in full. The other big factor with business checks is what has happened to the company over time. If the business has gone bankrupt or has gone through any number of takeovers through the years, there may be no one–or no money in an account–to pursue for payment.
And if John and his family, or people in similar situations, simply don’t want to do the research–or can’t because so many years have passed–there are two other choices. One would be to hire a “tracing” firm, which could try to pursue the companies involved to see if the check-holder has a claim. Tracing firms would either charge a fee for their service or would take a percentage of the money recovered.
In the alternative, anyone having a good relationship with a banker might ask for help and be allowed to try processing a few of the checks, with potential return charges waived. Several bankers I talked with said they would make such a deal, simply because a good customer bearing a box of years-old checks represents an interesting and unusual challenge.
