BNPL Debt Surge Can Complicate Bankruptcy Filings

The rise in Buy Now, Pay Later obligations is forcing consumer bankruptcy attorneys to change their workflows, a Bloomberg Law report notes.

Consumer bankruptcy lawyers report that client files now routinely feature dozens of individual Buy Now, Pay Later (BNPL) balances. Because BNPL providers rarely report to the major credit bureaus, these liabilities create a layer of debt that can complicate bankruptcy petition preparation.

“Tara Salinas, a Colorado bankruptcy attorney at Salinas Law Group LLC, said she is seeing buy now, pay later in at least 75% of her firm’s cases,” Bloomberg Law reports. “One of her high-income clients racked up about $11,000 with this type of loan, she said. Another client had about 80 buy now, pay later claims.”

Ohio bankruptcy attorney Adrienne Hines told Bloomberg Law that clients often don’t realize that BNPL loans are considered debt.

Failing to list a creditor on a bankruptcy petition can prevent the debt from being legally discharged, leaving the debtor liable post-bankruptcy.

Thirty-seven percent of U.S. consumers have made a purchase using a BNPL service in the past 90 days, according to the JD Power 2026 U.S. Buy Now Pay Later Satisfaction Study. This represents a 5-percentage-point increase in just one year.

Additionally, individual bankruptcy filings are up 13% this year, according to data from Epiq AACER and the American Bankruptcy Institute (ABI). Chapter 7 filings rose 14% from 2025 to 2026, while Chapter 13 filings increased 11%.

Regulatory oversight is beginning to catch up with the BNPL sector’s growth, at least at the state level. The New York State Department of Financial Services recently unveiled a regulatory framework establishing licensing requirements, underwriting mandates, and caps on late fees. And in June, Illinois Gov. JB Pritzker signed the Buy-Now-Pay-Later Loan Consumer Protection Act, which creates a licensing and regulatory framework for BNPL lenders operating in Illinois.

While the Consumer Financial Protection Bureau has withdrawn several guidance documents on BNPL, federal lawmakers are still paying attention to the BNPL marketplace.

In May, a group of U.S. senators sent letters to Equifax, Experian, and TransUnion, expressing concern that the current lack of uniform reporting for BNPL loans may be distorting consumer credit scores and masking household debt levels.

“There is not a standard method across credit reporting agencies on how to handle BNPL data,” they wrote. “Likely due to this gap, BNPL companies have come up with a variety of temporary solutions for BNPL loans, including BNPL companies creating their own methods of calculating consumers’ credit risk, using third parties to calculate that risk, or choosing not to participate in the U.S. credit reporting system. Until all relevant parts of this industry align on the use of BNPL data, consumers are left in limbo where BNPL data from a subset of lenders is provided to a subset of credit reporting companies with varying impacts for consumers.”

ACA’s Take

The rising prominence of BNPL debts within consumer bankruptcy files reflects a structural shift in the financial services landscape. More than 4 in 10 BNPL borrowers made a late payment on an installment plan over the last year, according to a LendingTree survey.

A TransUnion report found that 16% of debt collection companies worked BNPL accounts over the last year. As these accounts become more common, agencies should prepare to work with consumers who may be managing several small, concurrent debts rather than a single large balance.

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