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Advice if Creditor Refusing Payments

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Mark Cappel
UpdatedJan 24, 2023
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 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.

Best,

Bill

bills.com

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 Q2 2022 was $16.15 trillion. Auto loan debt was $1.50 trillion and credit card was $0.89 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

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.

While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.

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