Postdated checks are as Israeli as falafel and hummus. When used correctly they’re a tremendous help for cash-strapped individuals and businesses. But when a postdated check is used irresponsibly or illicitly that innocuous-looking piece of paper can become a ticket to financial ruin — as several financially struggling avreichim found out

THE PLAYERS

Name: Mendy and Ilana Shapiro

Age: Mid 30s

Number of Children: 4

Residence: Kiryat Sefer

THE LURE

“Don’t worry about it. Write me a postdated check for $10000 and you’ll not only get your money back you’ll earn a little interest as well”

THE BACKGROUND

For many Israelis postdated checks are a way of life. They use them to pay rent school fees installments on the new fridge and other big-ticket items like simchahs. But while we can understand why cash-strapped individuals use them what do the businesses gain by accepting postdated checks?

The answer is that Israeli banks will accept postdated checks as collateral allowing businesses to increase their available line of credit based upon the value of the checks they’ve deposited in their account.

So if postdated checks are a win-win situation for everyone what could possibly be bad?

Unfortunately in the hands of an unscrupulous person a postdated check can turn into a date with disaster as Mendy Shapiro discovered too late.

MENDY’S STORY

I have a friend — we’ll call him Danny — who once did me a big favor. I made a bad investment and lost a lot of money. I had taken out a loan to invest in a business and the loan repayments were choking me and causing shalom bayis problems between me and my wife. Danny heard about my financial problems and offered his help. “I thought we were friends. Why didn’t you call me? How much do you need?”

I didn’t want to accept Danny’s money. But he insisted. He said his financial investment business was doing great baruch Hashem. And a big part of the nachas he was getting from the business was being able to help others. He wrote me a check which he said I had better deposit and he didn’t want to hear another word.

That was Danny. Even in yeshivah he was like that. If he wanted to order a pizza and some of the other guys couldn’t pay for their share he’d say “Don’t worry it’s on me. Next time b’ezras Hashem you’ll be the one to pay.”

So I was able to repay my loan thanks to Danny and get my life back to normal. And I could see he was doing really well. He moved into a place that was twice the size of his first apartment. Every year he upgraded his car for a new model. He took his family to five-star hotels for Pesach. And he was starting to get a reputation as a gvir — a guy you could go to if you needed a loan or if you needed money to marry off a child.

I felt really proud to have him as my friend. So when he called one night and asked if I could do him a favor I said “Whatever you need I’ll do it!” I was thinking maybe he needed someone to deliver a tzedakah check or something like that. I was totally taken by surprise when he said his business was having some problems — nothing serious but he needed help with covering some debts.

I didn’t see how I could help him. I live pretty much from paycheck to paycheck. He told me I didn’t need to give him actual money. All I had to do was give him five postdated checks for a total of $50 000. He’d pay me back before the checks came due. In the meantime I’d be able to earn a little extra money — 2 percent interest on the checks per month — which he’d deposit in my bank account every month. (Excerpted from Mishpacha Issue 665)