Your obligations in this situation, and those of the lender, largely depend on the stipulations in your original loan agreement, or in any subsequent amendments, regarding how loan payments should be tendered. It is actually quite a common practice in the collection industry to require that payments on delinquent accounts be made using certified funds, such as a money order or cashier's check.
In most cases, a creditor which requires certified funds will state this fact clearly in its demand letters, settlement offers, and other correspondence relating to payments. However, if your original agreement clearly states that the lender requires payments via certified funds for any delinquent account, then the burden is probably on you to make the payment as required by the contract.
The fact that the collection agency refused your payment by personal check does not free you of your obligation to pay this debt. What concerns me is that the creditor or collector may try to add additional interest or fees to the account between your payments. Unless your loan agreement specifically requires payment in certified funds, or if the creditor otherwise informed you that it would not accept personal checks for payment, the lender should not be able to add any additional finance charges to the account after you attempted to pay the debt.
Keep a close eye on the balance, and if the creditor tries to add any additional fees, you may want to dispute these charges with the collection agency. If the lender refuses to remove any additional charges that have been added since the collector returned your payment, you may wish to contact your state's attorney general to file a complaint about these issues. Again, you are almost certainly still responsible for the debt itself, though your liability for any additional charges is questionable.
To learn more about the various types of assistance available to consumers who are struggling with debt, I encourage you to visit the Bills.com Debt Help page.
I wish you the best of luck in resolving this dispute.
I hope that the information helps you Find. Learn. Save.