Five years ago a Chapter 7 petition listed credit cards, a car loan, and medical providers. Today the same petition often lists eight or ten buy now, pay later accounts, each for a few hundred dollars, spread across Affirm, Klarna, Afterpay, PayPal, Sezzle, Zip, and the financing arms of Amazon, Apple, and Walmart. Clients regularly forget half of them. That is a problem, because a debt left off the schedules is a debt you may still owe.
What a BNPL loan is, legally
A pay-in-four plan or a longer Affirm installment loan is an unsecured consumer debt. The retailer was paid in full at checkout by the BNPL company, and you owe the BNPL company. There is no lien on the merchandise. For bankruptcy purposes it is the same category as a credit card balance, and it is discharged the same way. The longer 6, 12, or 36 month financing products carry interest but are equally unsecured and equally discharged.
List every account
The petition must list every creditor. 11 U.S.C. § 521(a)(1) requires it, and the discharge reaches only debts the creditor had notice of. BNPL accounts are easy to miss because they do not always appear on a credit report and because payments come out of a debit card rather than arriving as a statement.
Before filing:
- Log in to each BNPL app and screenshot open balances, including accounts at zero that remain active.
- Pull 90 days of bank and debit card transactions and search for every BNPL name. Autopay withdrawals are how forgotten accounts surface.
- Check Apple Wallet, PayPal, and Amazon, which host their own financing separately from the standalone apps.
Each account goes on Schedule E/F with the servicer's notice address, the balance, and the date incurred. Our § 521(a) document checklist covers the rest of the paperwork.
The 90-day rule
The most important fact about BNPL debt in bankruptcy is the date of the purchase.
11 U.S.C. § 523(a)(2)(C) creates a presumption of fraud for consumer debts to a single creditor of more than $900 for luxury goods or services incurred within 90 days before filing, and for cash advances of more than $1,250 within 70 days (dollar figures as adjusted April 1, 2025; they adjust every three years). A debt presumed fraudulent is nondischargeable unless the presumption is rebutted. "Luxury goods" means anything not reasonably necessary for the support of the debtor or dependents, so groceries and a work uniform are outside it, while a gaming console, concert tickets, or a designer bag are inside it.
BNPL companies do file these objections, Affirm in particular, because its larger-ticket loans more often cross the threshold. The practical rules:
- Stop using BNPL the moment you decide to consult about bankruptcy.
- If a large recent purchase was a necessity (a refrigerator, a car repair, a child's medical device), keep the receipt.
- If it was not, waiting until the 90 days have run before filing is usually right, unless a garnishment or a Superior Court judgment makes waiting impossible.
Turn off the autopay yourself
The automatic stay under 11 U.S.C. § 362(a) stops collection the moment you file, including automatic debits. But the BNPL company's system does not receive the court's notice for days and may not act on it for weeks. A scheduled payment on a linked debit card will simply go through. It can usually be recovered, but recovering it takes letters and sometimes a motion.
The clean approach: the day you file, cancel autopay inside each app, and if the app will not allow it, ask your bank to block the merchant. Notify the BNPL company in writing with your case number.
Means test and budget
BNPL payments are not deducted on the means test as secured debt, because they are not secured, and they are not a necessary expense. If you are near the DC median income line, the BNPL payments you are making do not help you qualify. They are simply debts that go away. On Schedule J, do not list them as an ongoing expense; after discharge you will not be making them.
After discharge
Since 2025, some BNPL lenders report account history to the credit bureaus, and newer FICO models are built to read those accounts. A discharged BNPL account should report as "included in bankruptcy" with a zero balance. If it keeps reporting a balance or a late status after the discharge, that is a credit reporting violation worth disputing, as covered in FCRA Credit Report Errors After Bankruptcy.
Frequently asked questions
Can I keep the things I bought with BNPL? Yes. The debt is unsecured; the BNPL company has no right to the merchandise, and ordinary household goods are exempt under either the DC or the federal exemption scheme.
I returned an item but Klarna still shows a balance. List the debt at the amount the servicer claims, note the return, and let the discharge resolve it.
My BNPL accounts total under $2,000. Worth including? Everything is included. There is no minimum, and small accounts add up: ten accounts at $200 is $2,000 of monthly cash flow that returns to you the day the case is filed.
Not sure Chapter 7 is available at your income? The DC means test calculator answers that in three minutes.