Buy now, pay later (BNPL) services like Affirm, Afterpay, Klarna, and PayPal Credit have exploded in popularity over the past few years. They promise an easy way to split purchases into manageable payments—no credit check required, instant approval, and the appeal of avoiding traditional credit cards. These are generally the best way to pay for things when you don’t have enough savings. But what happens when those “manageable” payments pile up alongside other debts, and you can no longer keep up?
For many people facing financial hardship, buy now pay later debts end up on the list when they file for bankruptcy. And while all BNPL lenders can show up in bankruptcy filings, some appear more frequently than others. Understanding which lenders are most common—and why—can help you see the bigger picture of how these services fit into financial struggles and what options exist when debt becomes overwhelming.
The Most Common Buy Now Pay Later Lenders in Bankruptcy Filings
Based on trends observed by bankruptcy attorneys across the country, Affirm and Afterpay tend to appear most frequently in bankruptcy filings, followed closely by Klarna and PayPal Credit (which functions similarly to BNPL services).
Why do Affirm and Afterpay show up so often? The answer lies in their widespread use and the types of purchases they finance. Affirm partners with major retailers like Amazon, Walmart, and Peloton, making it easy to finance everything from electronics to fitness equipment. Afterpay is popular among younger consumers shopping at clothing and beauty retailers. Both services are integrated directly into checkout processes, which makes it seamless—almost too seamless—to add another payment plan without fully considering the cumulative burden.
When someone is already managing credit card debt, medical bills, car payments, and rent, those $50 to $200 monthly BNPL payments can quickly become the tipping point. Personal bankruptcy filings are rising in Minnesota and across the country, and BNPL debt is increasingly part of the equation.
Why Buy Now Pay Later Debt Ends Up in Bankruptcy
Buy now pay later services market themselves as flexible and low-risk, but they share many of the same pitfalls as traditional credit—with a few unique twists:
Multiple Services, Multiple Payments: Unlike a single credit card bill, BNPL users often have accounts with several different lenders. You might have an Affirm loan for a laptop, an Afterpay plan for clothing, and a Klarna account for home goods. Each one has its own payment schedule and due date. When money gets tight, keeping track becomes a challenge, and missed payments start to add up. The worst thing is that they all pull from your bank account when your paycheck arrives, so the account goes to $0 within hours of payday.
No Credit Check Doesn’t Mean No Consequences: Many BNPL services don’t require a hard credit check to sign up, which makes them feel accessible. But that doesn’t mean they won’t report missed payments or send unpaid accounts to collections. And once debt goes to collections, it can lead to lawsuits, wage garnishments, and mounting stress. If you’ve been served papers by a debt collector like Messerli and Kramer, BNPL debt may be part of the reason.
Impulse Spending Becomes a Slippery Slope: BNPL services are designed to make spending feel easy. But when you’re already stretched thin financially, that ease can backfire. What feels like four simple payments of $25 can become unmanageable when combined with other obligations—especially if income changes or an unexpected expense arises.
Interest and Fees Add Up: While many BNPL plans advertise zero interest, late fees and penalties can quickly snowball. Miss one payment, and suddenly you’re facing additional charges that make it even harder to catch up. For people already living paycheck to paycheck, these fees can be the breaking point.
How Bankruptcy Handles Buy Now Pay Later Debt
Here’s the good news: buy now pay later debt is treated just like any other unsecured debt in bankruptcy. That means it can be discharged in both Chapter 7 and Chapter 13 bankruptcy, giving you a chance to clear the slate and move forward.
In Chapter 7 bankruptcy, most unsecured debts—including credit cards, medical bills, and BNPL accounts—are wiped out entirely. The process typically takes three to four months, and you walk away without owing those debts anymore. For someone drowning in Affirm, Afterpay, or Klarna payments, Chapter 7 can offer immediate relief and a true fresh start.
In Chapter 13 bankruptcy, you enter a three-to-five-year repayment plan based on what you can realistically afford. BNPL debts are lumped together with other unsecured creditors, and you make one manageable monthly payment to the trustee. At the end of the plan, any remaining unsecured debt—including what you still owe to BNPL lenders—is discharged. Chapter 13 is especially helpful if you’re also behind on a mortgage or car payment and need time to catch up while protecting your assets.
Should You Include Buy Now Pay Later Debts in Your Bankruptcy Filing?
If you’re considering bankruptcy, you must list all of your debts—including every BNPL account, even if the balance is small or you’re current on payments. Bankruptcy law requires full disclosure. Leaving out a debt, even accidentally, can cause serious problems down the road, including the possibility of having your case dismissed or debts remaining non-dischargeable.
Some people worry about including smaller BNPL balances, thinking they’d prefer to just pay those off separately. But the reality is that once you file for bankruptcy, all unsecured debts are part of the case. Trying to pay back certain creditors—like a favorite retailer or a BNPL service you want to keep using—can create legal complications and isn’t worth the risk. The goal of bankruptcy is a complete financial reset, and that means addressing everything at once.
As a practical matter, most loan companies are looking at your credit report every day and can see the bankruptcy and will close the account even if your lawyer doesn’t list them on the paperwork.
What Happens After Bankruptcy?
Once your bankruptcy case is complete and your BNPL debts are discharged, you’re no longer legally obligated to repay them. Creditors can’t contact you, sue you, or garnish your wages for those debts. You get to start over with a clean slate.
That said, your relationship with BNPL services may change. Some lenders may not approve you for new accounts right away, or they may require stricter terms. But this can actually be a positive thing. Sometimes it feels that lenders give people all the rope they need to hang themselves!
Some BNPL loan companies will stop working with you, but it is still possible to get this kind of loan going forward.
Moving Forward with Confidence
If you’re struggling with buy now pay later debt—whether it’s with Affirm, Afterpay, Klarna, or another service—and it’s become unmanageable alongside your other financial obligations, you’re not alone. These services were designed to make spending easy, but they weren’t designed to help you when life gets hard.
Bankruptcy isn’t about failure. It’s about taking back control. It’s a legal tool that gives you the power to stop the stress, eliminate the debt, and start fresh. Whether it’s BNPL accounts, credit cards, medical bills, or all of the above, bankruptcy can help you get to the other side.
If you’re ready to talk about your options, we’re here to help. At Walker & Walker Law, we’ve spent over 40 years helping people just like you find their way to a fresh start. You don’t have to figure this out on your own—we’ll walk you through every step, answer every question, and help you build a plan that works for your life. Call us today for a free consultation. Relief is closer than you think.