We’ve recently received several questions from readers asking about the effectiveness of using a restrictive endorsement on a check in order to finalize a debt.

Q. A Debtor in Texas Asks: "If I put "Paid in Full: Account #_____" on the back of a check and the creditor deposits the check, can they, at a later time, say I still owe money on this account?"

A. Matt Garcia, an ABC-Amega affiliate attorney in Texas responds:

Can the creditor claim you still owe money? Absolutely! People can claim just about anything. Will they win if they keep going after you for additional payment despite your endorsement? That depends on a lot of things.

It could depend on whether or not you signed a contract with the creditor that contains a clause that no restrictive endorsements will be valid.

It could also depend on whether the debt is in a regulated industry, such as transportation or telecommunications, where filed tariffs or published terms and conditions might exist.

Whether or not the check is for LESS than the full amount owed would be another important detail. If you are paying less, you may want to document a dispute with a letter in order for the restrictive endorsement to have a better chance of being enforced.

Personally, I don’t believe there is a simple answer since attorneys do try to undo restrictive endorsements at times. The best thing to do, if you are paying the FULL amount, is to ask the creditor to terminate services and send you a final bill before you send the payment. Then pay that bill with a check and place the endorsement “Paid in Full – Account No. XXXX”. I would not reference the invoice number. This will at least help build a paper trial in your favor.

Without all the facts specific to the situation, however, it’s not possible to determine whether or not the creditor could effectively pursue for additional payment.

Matt Garcia is with Barnett & Garcia, PLLC; Austin, Texas 78734

A. Bob Tharnish, VP International at ABC-Amega adds:

Be aware that unless you have previously raised a dispute with your creditor, you can't just restrictively endorse a check and expect it to hold up in court. That would be like restrictively endorsing your next house payment as “paid in full” and expecting it to relieve you of paying the balance on your mortgage if the creditor deposits the check. It just doesn’t work that way.

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Both Mr. Garcia’s and Mr. Tharnish’s responses are intended as informational and should not be construed as legal advice. This information is provided by ABC-Amega Inc. and is not intended to be legal advice and is not a substitute for competent legal advice on the referenced subject.

ABC-Amega Inc. provides 1st and 3rd party commercial collection services since 1929 and collecting in more than 200 countries worldwide, For further information, contact info@abc-amega.com.