There is no way to handle an NSF check. You can mark it as a "failed payment" but then it won't show up to "handle" the failed payment so it stays on the account as a credit. We should be able to "handle" the failed payment after we mark it as a failed payment.
Marking an in-school payment as Failed also "handles" the payment as well. So, once the payment is marked as Failed, it will be unapplied from charges and will no longer reduce the student's balance.