Why Did I Get a Disbursement Check?

Getting an unexpected check in the mail can be puzzling. If it’s from the government or another organization, you may be wondering – why did I get this disbursement check? Understanding disbursement checks can help you identify the source and purpose of the payment.

What is a Disbursement Check?

A disbursement check is a check sent to pay out funds from an organization’s account. It allows the recipient to deposit or cash the funds. Disbursement checks are commonly used by:

• Businesses – to pay employees, contractors, shareholders, etc

• Lenders – to provide loan proceeds to borrowers

• Government agencies – to distribute benefits, tax refunds, stimulus payments, etc

• Schools – to refund excess financial aid to students

• Other organizations – to pay out prizes, rebates, settlements, etc.

Disbursements allow payors to distribute payments efficiently via check. The person who gets the check can then use the money to get what they need.

Common Reasons for Disbursement Checks

There are many potential reasons you may receive a disbursement check. Some common sources include:

Government Payments

• Tax Refunds – Refund checks from federal or state tax returns.

• Stimulus Payments – Direct relief payments sent during economic crises.

• Benefits – Social Security, veterans benefits, unemployment insurance, etc.

• Judgments/Settlements – Resolution of legal disputes with government agencies.

• Rebates – Refunds of taxes or fees paid to a government.

Business Payments

• Payroll – Paychecks, bonuses, reimbursements, severance pay, etc.

• Accounts Payable – Payments to vendors, suppliers, contractors.

• Shareholder Distributions – Dividends, capital gains, profit sharing payments.

• Prizes/Giveaways – Sweepstakes or contest winnings.

• Rebates/Refunds – Money back from a merchant or manufacturer.

Financial Payments

• Loans – Disbursing loan proceeds from lenders.

• Insurance Claims – Settlement checks from insurers.

• Retirement Funds – Distributions from 401k, IRA, pension plans.

• Court Settlements – Resolution of civil lawsuits or legal disputes.

Student Refunds

• Financial Aid – Excess funds after tuition/fees are paid.

• Scholarships – Disbursement of awarded scholarship money.

• Reimbursements – Refunds of expenses paid out-of-pocket.

How to Identify the Source of a Disbursement Check

You can figure out where your disbursement check came from if it’s not clear where it came from or why it was written:

• Look for a note, memo, or memo on the check stub that explains the payment when you look over the check.

• Match the issuer – The check issuer is often the source of the payment.

• Check endorsements – Any endorsements or stamps on the back can indicate the source.

• Review account activity – See if a deposit corresponds to organizations you’re affiliated with.

• Contact the issuer – You can call the check issuer to inquire about the payment.

• Check mail – Review recent mail for notices explaining the disbursement.

• Log in to accounts – Check accounts like student financial aid for payment details.

• Contact other sources – If applicable, check with your employer, lenders, insurers, etc.

• IRS Letter 6475 – For stimulus checks, this letter explains eligibility and payment details.

Uncovering the source of an unclear disbursement check often just takes some digging and asking the right questions. With a little legwork, you can get answers and gain clarity on why the check was sent.

What to Do With a Disbursement Check

Once you’ve identified the source of your disbursement check, next you’ll need to decide what to do with it. Here are some options:

• Deposit the check – Endorse it and deposit directly into your bank account.

• To turn the check into cash, take it to a bank, store, or check casher.

• Leave it unclaimed – You can opt not to cash or deposit the check for any reason.

• Return the check – You can send the check back to the issuer if you wish to decline the payment.

• Watch for expiration – Government checks expire after 1 year. Banks may not accept checks older than 6 months.

• Report issues – If your check is lost, stolen, damaged, or expired, report it to the issuer immediately. They can investigate and reissue a new check if needed.

• Get tax help – If it’s a large amount, consult a tax pro to see if the check has tax implications that require special handling.

• Follow provided instructions – Some disbursement checks come with specific instructions on what steps the recipient must take.

The right option depends on your specific situation. Make sure you understand the source and purpose before deciding what to do with an unexpected disbursement check.

Disbursement Check Fraud

Unfortunately, fake disbursement checks are sometimes used in scams. If a check seems suspicious, take precautions to avoid becoming a victim of fraud:

• Verify the source – Confirm the check actually came from the apparent issuer before taking action.

• Watch for red flags – Misspelled names, odd logos, low check numbers, etc. can signal something amiss.

• Avoid unreasonable demands – Scammers often insist funds get wired back or spent in specific questionable ways.

• Don’t pay to claim funds – Legitimate checks won’t require you to pay fees upfront in order to deposit or cash the funds.

• Contact authorities – If fraud is suspected, alert the appropriate agencies to the attempted scam.

• Learn to identify scams – Review guidance from the FTC and FBI websites to protect yourself from check fraud schemes.

By understanding common disbursement scams, you can spot questionable checks and take prudent steps to avoid compromising your finances or legal standing.

Get Answers About Any Disbursement Check

An unexpected check can certainly raise questions. If you are puzzled about why you received a disbursement, make sure to:

• Carefully review the check for identifying information.

• Match the check to any notices you may have received about an upcoming payment.

• Verify the source of the check directly with the issuing organization or agency if unclear.

• Watch out for red flags that may signal a fraudulent check.

• Handle the check appropriately based on your specific circumstances.

Getting satisfactory answers will allow you to deposit, cash, or otherwise handle any disbursement check with confidence. A few quick checks can give you the clarity needed to resolve any uncertainties about government, business, or organizational checks that arrive unexpectedly in your mailbox.