Worthless Checks – Tennessee Law Provides a Merchant Options in Collection

On Behalf of | Nov 5, 2018 | Uncategorized |

Worthless Checks – Tennessee Law Provides a Merchant Options in Collection


Tennessee law uniquely provides both civil and criminal remedies for worthless checks.  A merchant must elect which avenue to travel. To make a prima facie case, it must be proven that the defendant acted knowingly or with fraudulent intent to defeat the merchant.   For example, the person knew that the funds were insufficient to cover a purchase or purposely stopped a payment on a check.  


Here, the merchant sues the person who passed the worthless check.  

Before suit may be filed, the merchant must send written notice by certified mail, giving the defendant ten (10) days to make good on the insufficient funds.

Upon proof that the defendant acted knowingly or fraudulently, the merchant will be awarded a judgment of the face amount of the check, as well as the following:

  1. Ten percent (10%) interest per annum on the unpaid balance
  2. Any reasonable bank service charges
  3. Court costs incurred by the merchant for bringing the civil action
  4. And, the merchant’s reasonable attorney’s fees.

There is also a treble damage provision that may allow a merchant to recover three times the face value of the check.  However, the additional award is capped at $500.00.

Civil judgments are valid in Tennessee for ten (10) years and may be renewed.  Once a merchant receives judgment, execution should begin to collect.


A merchant choosing to take the criminal route, loses some of his/her autonomy.  A criminal action is brought by the State. Instead of it being the merchant vs. the defendant, it becomes the State of Tennessee vs. the defendant.  The merchant becomes a third-party “affiant” or “victim.” However, just like in the civil arena, before prosecution can begin, the same written notice is required.  Once time has run, the merchant may go to the Sheriff’s Department and speak with a Judicial Commissioner. The Judicial Commissioner will write a narrative of the facts that the merchant will sign under oath.  A criminal summons will issue for the defendant. At this point, it becomes the State prosecuting the worthless check violator. The purpose of criminal law is punitive – to punish the defendant. Whereas above, in the civil arena, the main goal is for the merchant to be “made whole.”  In criminal court, the defendant will be required to make restitution to the merchant by paying back the face amount of the check, while on probation.


Criminal actions are limited in the sense that the legislature contemplates that the defendant received immediate value for a good or service with the expectation that the merchant received immediate payment.  As such, the following scenarios may not be prosecuted criminally but can be brought in a civil action:

  1. A check given in payment of a pre-existing debt, such as an in-house charge account at a business.  Here, value is exchanged for a future promise to pay.
  2. A post-dated check.  Here, the merchant gave an article of value in exchange for a check that the merchant knew to be valueless at the time of receipt.  By accepting a post-dated check, the merchant has given the value for the promise to pay.
  3. Checks not presented to the bank within thirty (30) days from the day the check was issued or passed.
  4. Checks where the merchant has accepted partial payment.  Legally, the merchant has agreed to convert the unpaid balance of the check to a debt.

In Tennessee, entities such as a corporation and limited liability company are not allowed to represent themselves. Very few areas of the law provide an option of civil remedies or criminal restitution. Merchants who receive that dreadful bank notice of a worthless check are encouraged to contact an attorney who practices collection law.