Services like Klarna, Affirm, Afterpay, PayPal Pay Later, and Zip are marketed as convenient ways to spread out payments without the sting of a credit card bill. But beneath the shiny, instant-approval surface lies a growing financial trap that’s pushing more Americans toward bankruptcy.
The Illusion of a Modern “Layaway”
Many consumers think of Buy Now, Pay Later (BNPL) as a modern twist on the old layaway plans—get the item now, pay in installments, and skip the wait. But unlike traditional layaway, you’re not slowly paying into a savings account with the store holding your purchase—you’re going into debt instantly.
And unlike credit cards, where balances are clearly tracked and minimum payments are expected, BNPL often makes debt feel smaller and more manageable than it is… until it’s too late. Make no mistake, these creditors know what they’re doing in using the same old enticements they use for credit cards to get you to spend but without many safeguards consumers used to have.
Everyday Purchases, Long-Term Debt
BNPL has crept far beyond big-ticket items. Consumers are falling prey to BNPL to even buy fast food via services like DoorDash. That means your burger and fries could still be costing you months from now—plus late fees and interest if you fall behind. For people already struggling with tight budgets, it’s all too easy to rack up multiple BNPL loans without realizing how quickly they add up.
Late Fees, High Interest, and Bankruptcy
Missed payments on BNPL plans often trigger steep late fees, and some companies convert unpaid balances into high-interest debt. These charges can snowball fast, especially for vulnerable consumers already living paycheck to paycheck. We are now seeing BNPL debt contributing to the spike in consumer bankruptcies—debt that borrowers never imagined could spiral so quickly.
Why Bankruptcy Can Help
With tariffs kicking in this month, unemployment creeping upward, and economists warning of a looming recession, households can’t afford to drown in unsecured debt. Bankruptcy remains one of the most effective tools to wipe the slate clean and stop the cycle. A Chapter 7 or Chapter 13 filing can eliminate BNPL, credit card, and other consumer debts—giving you the breathing room to start fresh.
A Fresh Start for the Road Ahead
If you’re already feeling the squeeze, now is the time to act. Clear your debt, build an emergency fund, and prepare for a long and uncertain economic downturn. The earlier you take control, the better your chances of weathering the storm ahead.
Author: Jenny L. Doling, Esq., LLM Taxation
CA State Bar Certified Bankruptcy Specialist
NACBA – Vice President
San Diego Bankruptcy Forum – Immediate Past President
Serving Bankruptcy Clients throughout California and
Tax Clients Nationallya