Bounced cheques or rubber cheques is a term that refers to a cheque that cannot be processed due to NSF (insufficient funds). If the bank finds that a cheque is NSF, usually they charge the account holder or the person writing the cheque NSF fees. Bounced check have various legal repercussions depending on the country that you’re in, if you’re a foreigner in that country make sure to research first what you’re going into just to be safe.
With Dubai, if you got bounced cheques you will get imprisoned for it (before). But now the government is a little more friendly to people that had bounced cheques and will issue fines instead. Fines are costly but its better than getting into the slammer for a bounced cheque for whatever reason you have. If you want to know more about bouncing cheques in Dubai, then you better read faster.
The fines: As mentioned, bouncing cheques in Dubai can get you fined, but there’s a condition to this. The fines only cover amounts not exceeding AED 200,000.00. Beyond that its trouble, so you really have to be careful. Below are the fines for your reference:
- A cheque up to AED 50,000.00 – a fine of AED 2,000.00;
- A cheque between AED 50,000.00 and AED 100,000.00 – a fine of AED 5,000.00;
- A cheque between AED 100,000.00 and AED 200,000.00 – a fine of AED 10,000.00.
How does this help: These things are not really a good thing for landlords since the bounced cheques below AED 200,000.00 is only reduced to a misdemeanor. But it’s fine since there are ways that banks are able to sort it like debt restructuring to sort out everything. One can’t really expect the unexpected and its perfectly understandable since businesses are risks. But these instances can be minimized if a landlord is able to get a good tenant in the first place.
How to prevent it: If you’re a landlord, the last thing that you want is to have a bounced cheque and that starts by properly profiling the tenants. If you don’t know how then there are service providers that can do that for you. These companies have the means in sourcing various information for risk management that can help landlords end up with a good tenant that won’t give them a headache. Below you can find a few things that they are able to do:
- Applicant profile
- Employment status
- Monthly income statement
- Rental history
- Legal compliance
Bounced cheques are a serious thing since there are legal repercussions. But thanks to the new laws, a leniency has been imposed for bounced cheques below AED 200,000.00. This is the reason why banks are now able to work with bounced cheques for a restructuring. If you are a landlord, the last thing that you want to happen is have a headache due to collections and this can be prevented with risk management. If you don’t have such a process, there are companies that can do that for you and even more. Visit bso.ae/dealing-with-bounced-cheques.html for more details.