Legal Question in Credit and Debt Law in California

Re: Refused payment

Contrary to what you may have heard, there is no law that invalidates a debt if a creditor refuses to take a payment. It's an urban myth, just like the people who think can get away with paying a debt by trying to get a creditor to refuse payment of a debt in pennies. If a creditor wrongfully refuses a legitmate tender, the most that can happen is the creditor might be barred from collecting future interest. However, you would still owe the money and accrued interest.

The prior incident you describe was probably a customer service move to avoid potential claims under state or federal fair debt colletion laws.

Creditors are entitled to receive payments in accordance with the credit agreement. Taking payments that vary from the agreement could be construed as an implied agreement to modify the payment terms. That's why creditors might refuse small or late payments and they are entitled to do that in most cases.