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Simple English definitions for legal terms
uncollected funds
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A quick definition of uncollected funds:
Term: Uncollected Funds
Definition: Uncollected funds refer to money that has been credited to a bank account, such as a checking account, but has not yet been received from the person or organization who wrote the check or made the payment. This means that the money is not yet available for use or withdrawal. It's like having a gift card with money on it, but you can't use it until you actually have the card in your hand.
A more thorough explanation:
Definition: Uncollected funds refer to a credit given by a bank on a checking or deposit account based on a check or other payment that has not yet been received from the payor.
Example: Let's say you deposit a check for $500 into your checking account. The bank may credit your account with the $500 before the check clears. This means that the $500 is considered uncollected funds until the bank receives the payment from the payor.
Explanation: In this example, the bank has given you a credit of $500 based on the assumption that the check will clear. However, until the bank receives the payment from the payor, the $500 is considered uncollected funds. This means that the bank has not yet received the actual money and the credit is not yet considered a part of your available balance.