Openpay Debt Help: Navigating BNPL Collapse and Building Your Safety Net in Australia

When a BNPL provider collapses, what happens to your debt?

In February 2023, Australian buy‑now‑pay‑later (BNPL) provider Openpay went into receivership. Administrators locked customers out from making any new purchases, but people with existing repayment plans still have to pay their debt. The company’s announcement explained that receivers from McGrathNicol would work with employees, merchants and customers to secure the best outcome, but this created uncertainty for the 347 000 customers using the platform.

If you’re an Openpay customer with an outstanding balance, you’re probably wondering what happens now. This guide will explain:

• How the receivership affects your repayment obligations and fees
• Where to get help if you’re struggling to pay
• Why building an emergency fund is crucial to avoid reliance on BNPL services
• Alternative debt‑relief options in Australia

Throughout this article, we reference information from reputable sources such as 9News and ABC News to help you make informed decisions.

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Understanding Openpay’s collapse and your obligations

Why Openpay went under

BNPL operators boomed during the COVID‑19 pandemic, but high inflation and rising interest rates have made their business models tougher. According to Openpay’s ASX announcement, the company appointed receivers in February 2023 to determine the best strategy for the business. Customers were immediately locked out of making new purchases, but any outstanding balances remained payable. A 9News report noted that Openpay had reported a net operating cash flow of –$18.2 million just weeks before entering receivership.

What you still have to pay

While the platform is closed to new purchases, the debt contract you signed still exists. The receivers have said that:

• Existing instalment plans and fees continue to apply. Openpay customers typically paid a deposit and then fortnightly fees up to $5 per fortnight.
• New transactions are blocked, so you can’t add more debt.
• Repayments will still be collected according to your schedule. Failing to pay could result in additional late fees or collection actions.

If you don’t keep up with repayments, the receiver or an external debt collector could pursue the outstanding balance. However, you still have rights under Australia’s consumer credit laws and BNPL regulations (see the “Legal protections” section below).

Should you continue paying Openpay if it’s in receivership?

Yes. Even though the company is winding down, you are still legally liable for the outstanding amount. Stopping payments can result in penalties, damage to your credit score and legal action. If you can’t afford the scheduled repayments, contact the receivers (McGrathNicol) or Openpay’s customer service to discuss hardship arrangements. You can also get free advice from the National Debt Helpline (NDH) on 1800 007 007.

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Your debt‑help options after Openpay

1. Contact the receiver or customer support

Openpay’s receiver is responsible for handling all existing accounts. Reach out to confirm your balance, ask whether any fees can be waived and request a hardship variation if you’re experiencing financial stress. You may be asked to provide evidence of income and expenses when applying.

2. Apply for financial hardship assistance

Under Australian law, credit providers must consider hardship requests if you can’t meet your obligations. Although BNPL firms were previously unregulated, from 10 June 2025 they must hold an Australian credit licence and comply with responsible lending obligations. This includes offering hardship assistance and being a member of the Australian Financial Complaints Authority (AFCA). If Openpay’s receiver refuses a reasonable arrangement, you can lodge a complaint with AFCA.

3. Consolidate or restructure your debts

If you have multiple debts (credit cards, personal loans, other BNPL accounts) you might benefit from consolidating them into one payment. Options include:

• Debt consolidation loans – rolling several debts into one loan, potentially at a lower interest rate.
• Informal payment arrangements – negotiating directly with creditors to reduce repayments or freeze interest.
• Debt agreements – a legally binding solution under Part IX of the Bankruptcy Act 1966 that consolidates unsecured debts and freezes interest, as we’ve explained in other articles.

4. Explore small business and sole trader relief

If you used Openpay for business purchases and are struggling with cash‑flow, you may be eligible for small business restructuring under Part 5.3B of the Corporations Act. This allows small incorporated companies to continue trading while they pay creditors a percentage of debts over time (provided the plan offers a better return than liquidation). Sole traders should speak to a registered debt counsellor or accountant about informal arrangements or formal insolvency options.

5. Seek free professional help

Independent financial counsellors can help you understand your options and negotiate with creditors. Contact the National Debt Helpline on 1800 007 007 or local services like Financial Rights Legal Centre, Tenants Victoria, or state‑based consumer advocacy groups. These services can advise you on hardship requests, credit reporting, debt agreements and bankruptcy.

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Why building an emergency fund matters – and how to start

One of the lessons from the Openpay collapse is the risk of relying on short‑term credit for emergencies. When a BNPL provider shuts down, you still owe the money, and you might have fewer options if you can’t pay. Building an emergency fund helps you avoid these problems by providing a financial buffer.

What is an emergency fund?

According to personal finance adviser Alex Strempel, an emergency fund is money set aside solely for unexpected expenses. It’s a buffer “between you and life” that ensures you don’t have to rely on high‑interest debt or liquidate investments in a crisis. Typical reasons to use it include:

• Unexpected bills (e.g., car repairs or medical expenses)
• Living expenses during a job loss or income drop
• Unplanned home repairs
• Peace of mind

How many Australians are prepared?

The reality is that many households don’t have adequate emergency savings. A Melbourne Institute survey of over 1,100 Australians found that almost 20 % of respondents would not be able to cover a $3,000 emergency expense, and a further 12.5 % would turn to a loan or credit card. This lack of savings forces people to rely on BNPL or other high‑cost credit when unexpected costs arise.

Meanwhile, the Australian Bureau of Statistics (ABS) reports that the household savings ratio plunged to 0.9 % of income in March 2024 – the lowest level in 17 years. High living costs and interest rates make it harder for families to save, but even small regular contributions can build a safety net over time.

How much should you save?

There’s no single rule, but many advisers recommend aiming for three to six months of living expenses. For those on irregular income (e.g., contractors or self‑employed), six to twelve months may be safer. If that feels overwhelming, start with a small goal: set aside $5 or $10 a week into a separate savings account. Over time, the fund will grow and provide confidence that you can handle emergencies without turning to BNPL.

Tips for building your emergency fund

1. Automate your savings – set up a regular transfer on payday into a separate account.
2. Start small and increase gradually – once you’re used to saving $10 a week, raise it to $20.
3. Redirect windfalls – tax refunds or bonuses can jump‑start your fund.
4. Cut discretionary spending – identify non‑essential expenses (streaming services, take‑away) and divert those dollars.
5. Keep it accessible but separate – use an online savings account with limited withdrawal access.

How an emergency fund protects you from BNPL debt

When you have cash reserves, you’re less tempted to use BNPL for essential expenses. Instead of splitting a purchase into fortnightly instalments (and paying fees if you miss a payment), you can pay upfront from your fund. This reduces the risk of accumulating multiple BNPL accounts and helps you avoid the stress of dealing with receiverships like Openpay’s collapse.

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Understanding your legal protections and credit implications

Responsible lending and credit checks

From June 2025, BNPL providers must obtain an Australian credit licence and comply with responsible lending obligations. This means:

• They must assess whether a BNPL product is suitable by checking your financial situation.
• They must disclose fees and repayment terms clearly, and cap total fees at $320 in the first year and $245 in subsequent years.
• They must join AFCA, giving you a free dispute resolution option.

Although Openpay’s collapse occurred before these laws took effect, the same principles apply when dealing with other BNPL providers. Always read terms carefully and be wary of high fees or aggressive lending practices. If you believe a BNPL provider has acted unfairly, you can complain to AFCA.

Credit score impacts

BNPL transactions may now be reported to credit bureaus, and missed payments can negatively affect your credit score (depending on the provider and reporting agency). Keeping up with your repayment schedule or negotiating a hardship arrangement can help mitigate damage. If a default is listed on your credit file, it usually remains for five years, even after you repay the debt.

What if debt collectors contact you?

If Openpay’s debt is sold to a collector, know your rights. Under ACCC guidance, collectors can only contact you a limited number of times and must treat you fairly. You can request contact in writing and propose a reasonable repayment plan. If they threaten legal action or wage garnishment, seek advice immediately from a financial counsellor or legal service.

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Emergency funds and BNPL: a case study

Imagine Jane from Brisbane is a single mother who used Openpay to finance a $1,800 laptop for her son’s schooling. She chose a 12‑month plan with fortnightly fees. A few months later, Openpay entered receivership. Jane lost her part‑time job and couldn’t afford the instalments. She contacted the receivers and arranged a reduced payment schedule. However, she still faced stress because she had no savings and other debts.

After speaking with the National Debt Helpline, Jane:

1. Negotiated a hardship variation for her Openpay debt.
2. Consolidated her credit‑card debt into a lower‑interest personal loan.
3. Started saving $20 a week in a separate emergency fund account.

By the time her Openpay balance was paid off, Jane had over $800 in emergency savings. She now uses her fund to handle unexpected expenses and avoids BNPL products entirely. This case illustrates how combining debt‑help strategies with savings habits can reduce stress and improve financial security.

Frequently Asked Questions (FAQs)