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boosted
Posts: 56
Registered: ‎06-10-2007
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Restrictive Endorsements

[ Edited ]
just some info i would like to share. it's new to me so i guess it will help someone out.
 
 
 
 
"Restrictive Endorsements on Checks

Originally published: 2/23/2005

Submit a Question

This article was submitted to Credit-to-Cash Advisor as an addendum to the January 2005 Q&A on the same topic. This information applies in particular to states such as MD, Wash. DC and VA where UCC endorsements are not valid.

Thank you, Bente Selby, Credit Manager, Printing & Graphic Communications Association.

Customers will sometimes send checks that contain a "restrictive endorsement" on the back or in the memo portion. Restrictive endorsements include language such as "in full payment of account", "full and final settlement", "final payment", or other language denoting that depositing the check will operate as a release of all claims against the customer. The exact wording of the restrictive language is not significant. However, depositing a check bearing restrictive language may result in a loss of your right to pursue the customer for any additional money.

You cannot cancel the effect of restrictive language merely by crossing it out or obliterating it. Courts in the Washington metropolitan area have also held that creditors cannot trump the customer’s restrictive language by placing "reservation of rights" language in the endorsement portion of the check, such as "under protest", "without prejudice", or "with reservation of rights."

The law may vary from state to state. You should consult an attorney if you receive a check from an out-of-state customer to determine handling of these kinds of payments.

A check bearing a warning endorsement is a time bomb. Turning down any payment, especially on an account that is severely past due, is difficult to do. However, any customer who goes to the trouble of placing a restrictive endorsement on a check probably did so for a reason. By depositing the check, it is likely that you will either have to write off the remainder of the account or expend additional legal fees litigating whether this is an "accord and satisfaction."

No check bearing restrictive language should be accepted unless: (1) It is a significant portion of the total account, or (2) the account is otherwise going to be written off.

If a decision is made not to deposit a check, it should be immediately returned to the customer. Some courts have ruled that a creditor receiving a check purporting to be payment in full must return it promptly or risk having a presumption arise that the creditor’s retention of the check is in satisfaction of the entire obligation.

The period of retention is the most significant factor in determining whether an accord and satisfaction has resulted. Therefore, if you are going to hold on to a check while negotiating further payments, make sure to put in writing that you are merely holding the check for a short period in order to attempt to negotiate an amicable resolution. Once negotiations have failed, return the check immediately. If you use a lockbox for customer payments, you should conspicuously designate in writing an office outside of the normal check-processing unit to whose attention restrictively endorsed checks must be sent. This designation could be made, for example, in bold on the bottom of every invoice.

*****

Disclaimer: This article is not intended to be legal advice and is not a substitute for competent legal advice on the referenced subject.

Information provided by ABC-Amega Inc. Since 1929, providing first party accounts receivable collections outsourcing and third party debt collection for management of your commercial receivables portfolio."



Message Edited by boosted on 06-14-2007 02:33 PM

Message Edited by boosted on 06-14-2007 02:57 PM
_______________________________________________________
Started my credit repair journey on 11/29/13 with 27 collection accounts with 24 being medical related, 1 cellphone account, 1 bank account and 1 cable TV account.
Starting scores are EQ 506, TU 516, EX 477.
First PFD letter sent out on 12/2/13/ Response on 12/5/13 agreeing to the terms of letter.
Second PFD letter sent out on 12/2/13/ Still waiting on a response.
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: Restrictive Endorsements

This is an old school tactic that can be effective. The laws regarding restrictive endorsements vary greatly between each state. Always consult a lawyer or your local AG before attempting.
 
 
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Timothy
Posts: 9,252
Registered: ‎03-19-2007
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Re: Restrictive Endorsements

I used one with my Cable bill that went to CA.
New Member
Trisha
Posts: 1
Registered: ‎06-13-2007
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Re: Restrictive Endorsements

If you google around, there are a couple of sites that have a list of the states where REs hold up........OR look in your states UCC under "negotiable instruments".
 
New Contributor
boosted
Posts: 56
Registered: ‎06-10-2007
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Re: Restrictive Endorsements



Tuscani wrote:
This is an old school tactic that can be effective. The laws regarding restrictive endorsements vary greatly between each state. Always consult a lawyer or your local AG before attempting.
 
 


Why do i need to consult a lawyer am my AG?
_______________________________________________________
Started my credit repair journey on 11/29/13 with 27 collection accounts with 24 being medical related, 1 cellphone account, 1 bank account and 1 cable TV account.
Starting scores are EQ 506, TU 516, EX 477.
First PFD letter sent out on 12/2/13/ Response on 12/5/13 agreeing to the terms of letter.
Second PFD letter sent out on 12/2/13/ Still waiting on a response.
New Contributor
boosted
Posts: 56
Registered: ‎06-10-2007
0

Re: Restrictive Endorsements



Timothy wrote:
I used one with my Cable bill that went to CA.


What was the outcome?
_______________________________________________________
Started my credit repair journey on 11/29/13 with 27 collection accounts with 24 being medical related, 1 cellphone account, 1 bank account and 1 cable TV account.
Starting scores are EQ 506, TU 516, EX 477.
First PFD letter sent out on 12/2/13/ Response on 12/5/13 agreeing to the terms of letter.
Second PFD letter sent out on 12/2/13/ Still waiting on a response.
Moderator Emeritus
Timothy
Posts: 9,252
Registered: ‎03-19-2007
0

Re: Restrictive Endorsements

[ Edited ]

boosted wrote:


Timothy wrote:
I used one with my Cable bill that went to CA.


What was the outcome?





They accepted it as they deposited the promise i provided and they converted it into a negotiable instrument and deposited it in their account.

I know it had to go though the rounds as it took almost 2 weeks for them to deposit.

Per our agreement they have a few more days to delete.

Message Edited by Timothy on 06-15-2007 06:25 PM
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Timothy
Posts: 9,252
Registered: ‎03-19-2007
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Re: Restrictive Endorsements

Credit Department
Cox Communications
1550 W. Deer Valley Rd.
Phoenix, AZ 85027

Re: Account #: XXXXXX Cox Communications
Amount: $327.93

Cox Communications:

I just got off the phone with one of your wonderful Representatives Jessica. She was very helpful in providing the information I requested. Jessica informed me that by policy Cox Communications will withdraw my account from collections and remove the negative entries from my credit report after full payment has been made.

In light of Jessica’s statement, I am willing to pay the requested amount IN FULL if you agree to: Withdraw this account from your collections agency and an immediate deletion of this account from any and all credit reporting agencies (Equifax, Experian and TransUnion) Listed as Acct XXXX Credit Control Corp. The purpose of this settlement is merely to have this item removed from my credit files. It is not to be construed as an acknowledgment of liability for this debt in any form.

If you agree to the terms and accept this agreement, convert the attached promise into a Negotiable instrument in the amount of three hundred twenty seven dollars and 93 cents ($327.93) in exchange for full deletion of ALL references regarding this account from my credit files and full satisfaction of the debt.

Cox Communications agrees to have Credit Control Corporation delete ALL information regarding this account from the credit reporting agencies WITHIN TEN CALENDAR (10) DAYS following receipt of payment as specified above and will not discuss the terms of this settlement with anyone. If contacted by any third party, including credit-reporting agencies, Cox Communications nor Credit Control Corporation will not acknowledge that any settlement offer was made, accepted or executed and report the alleged debt as “unverifiable”.

If you agree to the above terms, please deposit the attached promise. Depositing this Negotiable instrument (see ARS 47-3104) shall constitute a legally binding contract, enforceable under the laws of Arizona.
Please address all correspondence regarding this account to:

Timothy
Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
0

Re: Restrictive Endorsements

There has been a LOT of caselaw on RE, and it is almost never clearcut.
 
The basic problem with RE is this. If they were a rock solid, bulletproof means of satisfying a debt, then a person could obtain a $250K mortgage, pay the first month's payment, write "Paid In Full" in the memo box, and they'd own their home free and clear.
 
If you honestly believe that's going to happen, then I have a bridge I'd like to talk to you about.
 
If it did happen, and it ain't gonna, the bank would simply run your check electronically. The RE would not be there.
Moderator Emeritus
Timothy
Posts: 9,252
Registered: ‎03-19-2007
0

Re: Restrictive Endorsements



Noah_Bodie wrote:
There has been a LOT of caselaw on RE, and it is almost never clearcut.
The basic problem with RE is this. If they were a rock solid, bulletproof means of satisfying a debt, then a person could obtain a $250K mortgage, pay the first month's payment, write "Paid In Full" in the memo box, and they'd own their home free and clear.
If you honestly believe that's going to happen, then I have a bridge I'd like to talk to you about.
If it did happen, and it ain't gonna, the bank would simply run your check electronically. The RE would not be there.





I quiet agree. I have noticed on the back of statements about alternate address for RE's.

This is also why it was sent to Cox directly and not their normal payment address.

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