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Advice if Creditor Refusing Payments

Mark Cappel
UpdatedFeb 26, 2024

A payday loan co. is refusing to cash the check I sent to them for the full payment, why would they refuse a full payment?

I have an old payday loan which was recently sent to collections. They said I had two weeks from the date of the letter to pay it in full. Because I had moved, I received the letter two days before that time was up. I mailed a personal check for the amount in full ($385) and they sent the payment back to me uncashed with a letter saying that although they appreciated the payment they could not take it in that form and that I had to call them to make payment arrangements and they could only take the payment as a cashiers check, money order or cash at one of their locations. Why do I need to make arrangements on something I am paying in full? Am I still obligated to make this payment to them, as I paid in full and they refused to accept the payment? There was nothing in the first letter stating how I had to pay it, and the money is in the bank account. What are my legal obligations at this point? Thank you so much. Blessings, Isabella

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 Debt Help page.

I wish you the best of luck in resolving this dispute.

I hope that the information helps you Find. Learn. Save.



Did you know?

Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Auto loan debt was $1.607 trillion and credit card was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in Utah, 19% have any kind of debt in collections and the median debt in collections is $1943. Medical debt is common and 12% have that in collections. The median medical debt in collections is $980.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.



BBusiness Ca, Jul, 2010
I recently came across your post and have been reading along. You've provided informative points.