How Long Does It Take A Check To Clear

by Andy Miofsky, Esq.

May 16, 2008

The safe answer is about two weeks. Now, why do I care? Because banking rules are confusing and often favor the bank over the customer.

Here is a scam being reported by the media. The scenario involves a person hiring a lawyer to negotiate a settlement of money owed to the client by another party. The client contacts a lawyer, hires the lawyer, then eventually tells the lawyer the other party has agreed to pay the debt. The lawyer receives a check payable to the client and the lawyer deposits the check into a trust account while waiting for the funds to clear the bank.

Next, the client directs the lawyer to immediately send the money to another party in order to close an important business deal. The lawyer contacts the bank and is told the funds “are available”, so the lawyer writes a check against the trust account. Later, the bank notifies the lawyer that the check bounced and demands repayment of the funds deposited into the lawyer’s trust account.

How can this happen? The CNA insurance Risk Control Quarterly, an off-line publication, says federal law and bank regulations require banks to make funds available within a few days of deposit despite the fact that it takes up to two weeks to complete the check clearing process. The goal is to promote a free flow of funds, which sounds like business wants business to roll along unimpeded. But, remember the part about banking laws favoring the banks? In the event a check does not clear, the bank can demand repayment from the depositor, despite the fact that the bank told the depositor that the funds “were available”.

This rule is not limited to lawyers and trust accounts. Anyone making a deposit by check is liable to the bank in the event the check does not clear. The moral of the story is to make sure your checks are not rubber before you spend the money.

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Andy Miofsky, Esq.

Andy Miofsky is an Illinois consumer rights lawyer with offices in Granite City Illinois and Mount Vernon. Andy represents people with bankruptcy and student loan debt problems throughout the Central and the Southern District of Illinois since 1979.

Last modified: May 16, 2008