His dog ate the cash, and Treasury paid him back

I was enjoying a cigar and a beer with a friend recently when he shared a story about how his dog ate an envelope that contained $250 in cash. His money-munching beagle, Champ, basically enjoyed an expensive meal when no one was home.

Fortunately, my friend's veterinarian assured him that eating cash doesn't actually hurt a dog. The paper passes through their systems undigested before getting deposited into a pile of you-know-what. What's more, after a messy "money laundering" procedure, my friend did some research and found he could get the mutilated cash replaced by the Federal Reserve.

Dog eats money
Jim Sugar | Getty Images

In fact, each year, the U.S. Treasury handles, on average, 30,000 claims and redeems more than $30 million worth of damaged and mutilated currency. There is a correct procedure for replacing U.S. currency, and it all depends on how badly the money has been damaged, according to the Bureau of Engraving and Printing.

U.S. currency that is merely very dirty or seriously worn out but where the value is clear is not considered mutilated and can be traded in at any bank, from which it will eventually be processed out of circulation, according to the BEP. Damaged but not mutilated currency includes any bill that is clearly more than one half of the original bill and does not require any special examination or investigation to determine its value.

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Mutilated currency, however, is considered to be any bill that comprises less than one half of the original bill and/or requires special examination to determine its value. Mutilated currency is most often damaged by fire, flooding, chemicals, explosions, animals or insects, BEP officials explained. Another common source of damage to currency is petrification or deterioration, which occurs when someone decides to bury their money.

Mutilated currency can be mailed or personally delivered to the Bureau of Engraving and Printing. When mutilated currency is submitted, a letter should be included, stating the estimated value of the currency and an explanation of how the currency became mutilated.

You can contact the Mutilated Currency Division at 866-575-2361 for exact details. Personal deliveries of mutilated currency to the Bureau of Engraving and Printing are accepted at the Office of Currency Standards in Washington, D. C.