Can a bank stop payment on a check once it has cleared?

Question

We received a refund check from our lender for overpayment of taxes. I deposited it on monday last week, and they said they had to wait for the check to clear before it would be available. On Saturday, the check cleared. Last night they bank put a hold on our account stating that we are overdrawn. I went to the bank and they said that the company who sent the check stopped payment
Is it possible to stop payment on a check that has already been cleared?

Answer 1

if the check has already cleared, it has already been paid, so no, you can't place a stop payment on an already-paid-check. However...just because you deposit a check doesn't mean it clears that night. Depending on where it's from, it could take days to clear. Now, the Check 21 Act got rid of a lot of check float by expediting the process through which checks are cleared. It introduced the substitute check, or the electronic check, as well as the truncated check. Basically, instead of sending the actual paper check from your bank to the Fed bank or banks, to the other bank, and so forth, it send an electronic image instead...much faster.

According to Regulation CC, banks can put a 2 day hold on local items, a 5 day hold on non-local items, a 9-day hold on anything over $5000, and a 2 day exception hold on any of these if they have reason to believe that the items will be returned unpaid. Some deposits are considered to have next-day availability, like government checks, cashier's or treasurer's checks, money orders (not Walmart ones), cash (obviously), wire transfers, ACH credits, and on-us checks (checks drawn on the same institution where it's being deposited).

Also...I don't understand how a check can clear on Saturday. Saturday is not a business day. Technically, the check "cleared" late Friday night.

The thing is, the company probably put the stop payment on the check while it was floating around the Federal Reserve System. By the time it got to the bank it was drawn on, they already had the stop pay in their system, and the check was returned to your bank, where the money was recovered and withdrawn from your account to cover the check.

Contact the company and ask them why in the world they stopped payment on the check, tell them you were overdrawn as a result, and ask for reimbursement. Give the same info to your bank and maybe they'll reverse the overdraft fee since it technically isn't your fault.

Answer 2

Stopping Payment On A Check

Answer 3

Did you see that it cleared online or did you go to the bank and ask? It's possible it was reported as having cleared online, but that there was more going on at the bank and that it had not actually cleared or that it would only actual be able to clear on a business day (i.e. not until Monday).

If it had cleared, then it was already paid. A stop payment is to prevent the money from being transferred to begin with. Once the check has cleared, it should be the individual requesting the stop payment's problem. Their bank shouldn't even be able to process a stop payment on it and your bank shouldn't be able to either.

Answer 4

It depends on how long it took that check to get to the lender's bank. Typically your bank will make you wait 5-10 days to see if the check cleared. IT may have taken longer to get to the lenders bank where the stop payment was issued. Your bank has no wa of knowing that until it comes back.

I'd get ahold of your lender right away and find out what's going on and why did they issue you a check in the first place only to put a stop payment on it. Then find out why your bank cleared the check only to take it back out.

Sadly your bank can do that...it's not right but they can do it.

I wouldn't want to get into too heavily with my lender but if that money was rightfully yours and not an accounting error meaning you didn't overpay as much as you thought..then you could try to pursue them for writing a hot check and make sure that they reimburse you any expenses. Your bank should understand your situation and not charge you any fees though\

good luck with it

Answer 5

I went thru the same issue with Chase Bank. I had someone write me a check, clear next day, then only to have it canceled once it cleared by the other person s bank. Chase Bank froze my account, deducted the amount that the check was for from my account. It landed me negative in the thousand since I had already cashed the check and withdrawn it in cash from my account. Chase said that they have a right to cash checks before they clear using their discretion on what checks they cash. They charged my account with overdraft fees because of it. I sued them and am expecting full compensation, including the overdraft fees. Banks think they can do whatever they want and are about the law. If you arm yourself with the knowledge you need, the banks won t take advantage of you. Just because they are banks doesn t mean that the are ALWAYS practicing LEGAL ways around your money. Remember the bailouts. They needed that money for a reason. They will swindle you out of the shoes you are wearing if they had too.

Answer 6

Stop A Check

Answer 7

No. The check cleared. The bank and your lender is trying to pull something.
Tell them the check cleared that is that. The lender paid it already. The bank cleared it and cashed it, correct? They can not stop payment if it has already been cleared. It is between the Bank and the Lender now. Call your lender and ask them what is going on?

Answer 8

No, not on a cashier's check. I tis like a money order. They cannot stop it. But that does not mean you are safe, there has been a rash of counterfeit cashier's checks from foreign countries, sometimes it is not discovered until months after the check "clears", then you are screwed.

Answer 9

It depends on the circumstances of the check. The amount of the check sometimes plays a role in it too. I would call the company and the bank demanding answers if I were you. Your account should not be frozen or have a hold on it.

Answer 10

I would contact the company and the bank and chew some people out. Why did they stop payment?