Buy now pay later (“BNPL”) arrangements are becoming more and more common. While it’s not clear how these arrangements are going to be treated in bankruptcy filings - if they get any special treatment at all - here is what we do know:
You own the item you purchased.
Whether it’s through Afterpay, Klarna, Affirm, or another provider, if you purchased something, it’s your property. That means it has to be listed as an asset on your Schedule A/B and - if possible - protected with an exemption on Schedule C. This is true even if you have not yet made all the payments for it.
Your agreement to pay the rest of the installments is considered an executory contract.
This means it’s listed on Schedule G of your bankruptcy forms. All you need for this form is the name and address of the company your contract is with and a list of the items you purchased.
Made all payments? No need to list the contract.
If you’ve already made all payments under the BNPL arrangement you have, there’s nothing else you need to worry about with respect to the contract. Just make sure the items you purchased are listed as an asset.
What do you want to do about the contract?
You’ll have to let everyone know what you want to do with the contract on your Statement of Intentions. You’ll be given the opportunity to assume the contract (and keep things basically the same) or reject the contract to eliminate your obligation to pay the remaining installments.
Whether and how the company can take back the items you purchased if you reject the contract depends on state law. Folks who are worried about losing something they purchased under a BNPL arrangement often wait until they’ve made their final payment before filing their bankruptcy case to avoid any issues.