“Paid in Full” Checks: to Accept or Not?

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    full and final payment

    “Paid in full,” “full and final payment,” or other similar wordings are the biggest red flags when collecting a check from a debtor. You may have encountered a similar attempt in the past and we certainly hope you made the right move. If you’re in the bargaining stage of whether to accept a check with a special phrase, we’ll tell you this early – return it and do not deposit!

    What happens if you accept and encash a check that says “paid in full?”

    In most jurisdictions, a check with “payment in full” written on it is binding. Basically, it means you are accepting the indicated amount on it as the final payment even if it is not the full amount owed. You eliminate your right to collect 100% of the debt and you open yourself up for a countersuit file for mis action.

    Why do clients use special wordings on checks?

    You may be generous enough to give the benefit of the doubt as you like but, the truth is, clients, use paid-in-full phrases to invalidate your claim to fully collect.

    What should you do if you receive a partial-payment check with a “paid in full” written on it?

    • Reach out to the debtor and clarify the purpose behind the writing on the check but be very careful to not state that you are accepting the check.
    • Return the check and avoid further contact until you are paid in full.
    • Never keep the check. We have encountered a client who did not encash the check but didn’t return it either. Their argument was overturned in litigation.
    • If the client insists on paying with the said check, reach out to a collection professional immediately and do not reach out to the debtor anymore.

    To wrap it up…

    Debtors become very creative when avoiding payment and it is extremely important to follow the instructions of the collections professional that you will hire. We, at Adams, Evens, and Ross, have been dealing with staffing and recruiting debt collection over the past 30 years, and believe us when we tell you that the more you engage with problematic debtors, the less likely you will collect.

    We have an in-house attorney and we are the biggest collection firm that serves the staffing and recruiting agency. The added element of having an experienced debt collector on your side creates an unknown factor and brings more pressure towards the debtors.

    We are here to help you with your collection needs. You may reach out to wilson@aercollections.com or you may book a free consultation here.

    If you want to place an account, please fill out our webform. We have a No Collection, No Charge policy.

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