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Stop Payment Before it is Too Late!

Stop Payment Before it is Too Late!

A stop payment order is an order from a drawer of a check
given to a bank to stop payment on that check. A stop payment order will annul
that check, preventing the holder from cashing it or otherwise presenting it
for payment. Issuing a stop payment order is not an instantaneous or easy
process, but it the best way for a drawer to prevent a check from being drawn
on his or her account.

The primary reason that a drawer might try to stop
payment on a given negotiable instrument is if some party involved with the
instrument lost it and the instrument’s current whereabouts are unknown. For
example, if the instrument in question was a check which had been given a blank
endorsement by the payee and then lost by that payee on his or her way to cash
it, then upon being informed, the drawer would likely issue a stop payment
order on the check in order to prevent an unintended party from cashing the
check.

Unfortunately, in the above circumstance, it’s likely
that the stop payment order would be ineffective. To stop payment on a check,
the drawer must provide the bank with information about the check in question
and the account from which the check was drawn. Furthermore, such information
must be provided with enough time to the bank for it to take the necessary
action.

If the bank is given a stop payment order, for example,
one hour before the check is submitted for payment, then this might not
constitute a situation in which the stop payment order was issued to the bank
with enough time for the bank to take action. As such, the bank would not be
held responsible if the check was cashed, even though the stop payment order
had been submitted.

The only people who can issue a stop payment order for a
given account are those who can draw on that account. There might be multiple
individuals attached to a single account, but in such a case only one
individual is necessary to issue a stop payment order.

When attempting to stop payment, a customer might call in
to the bank first to stop payment immediately and then send in written
confirmation at a later date. The information necessary to stop payment can be
submitted orally, but any such stop payment order would expire after 14 days if
it was not confirmed in writing during that period. A written stop payment
order, on the other hand, would last for six months after which point the check
would actually become payable again. The stop payment order can be renewed,
however, in order to ensure that the check will not be cashed.

 Additionally,
another statu
te of the Uniform Commercial Code states that banks do not have to pay
checks older than six months unless those checks are certified. This means that
after two six
month cycles, a stolen or lost check will likely be defunct, although to be
absolutely certain the drawer would have to continue issuing stop payment
orders.

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