Find out their side of the story. everybody makes mistakes and they may not even know yet. You may be able to redeposit the check and be paid. If not take the check to the original bank and ask for a cashiers check, it will cost a fee but it will be worth it. Washington has statutes that say no fee can be charged, I do not know about other states this is a link to Washington's rules
Evaluate the amount of effort and value of the loss
If the bank will not honor the check you can sue in small claims for $4000 or less, turn the check over to a collection agency, or seek help from law enforcement. Each choice has advantages and disadvantages. Small claims court takes time and has a risk of wasting your time and not getting the money. A collection agency will take a share of the money they collect. Law enforcement has plenty to do and your bad check will not be at the front of the list, however if the check is large or the check writer has other issues Law Enforcement can be very effective.
Write it off
Any bad debt can be written off of your income and you will get to send the check writer an IRS form 1099 declaring the bad debt as income and they will have to pay tax just like they made more money.
Bad Checks are common, unlawful and expensive to all of us, but maybe you can get some of your money. If you still have questions hire a lawyer.
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