How are buy now, pay later (BNPL) loans treated in Chapter 7?

Buy now, pay later (BNPL) loans from companies like Affirm, Klarna, Afterpay, and Zip are usually treated the same way as credit card debt or personal loans in bankruptcy: they're unsecured debts. That means the lender doesn't have a claim to the item you bought, and in most cases the debt can be erased in Chapter 7.

This confuses a lot of people. Because you used the loan to buy something specific, like a couch or a laptop, it can feel like the item still belongs to the lender until you pay it off. But most BNPL loans don't work that way. You own the item from the moment you buy it, and the lender can't take it back if you stop paying or file bankruptcy.

Where to list BNPL loans in your Upsolve account:

• List the loan as a debt. List each BNPL loan in the Debts section of the Upsolve account.
• List the item as property. Anything you bought with a BNPL loan belongs to you, so it's generally listed alongside other things you own in the Assets section of the Upsolve account.

Note: BNPL payments are NOT generally listed in the monthly expense section because the debt will usually be erased, and you won't need to keep making these payments.

Is lease-to-own the same as buy now, pay later?

No. Companies like Acima, Progressive Leasing, Snap Finance, and Katapult often appear at checkout next to BNPL options, but they work differently. With lease-to-own, you're renting the item until you finish paying, so the company still owns it. If you stop making payments, they can take it back.

In bankruptcy, lease-to-own agreements are listed in the Contracts/Leases section, not the Debts section.