What Happens If You Can’t Pay Afterpay? How to Handle BNPL Debt in Australia

Facing Afterpay Debt: A Growing Reality

Buy‑Now‑Pay‑Later (BNPL) services like Afterpay have become a popular way to spread the cost of purchases across four fortnightly instalments. One in three Australians used Afterpay in the past 12 months, according to the company’s 2023 report. With millions of users, it’s not surprising that many Australians face difficulties keeping up with repayments, especially as cost‑of‑living pressures mount.

If you’ve missed an Afterpay instalment or worry you won’t be able to pay, you are not alone. This article explains what happens when you can’t pay Afterpay on time, the potential fees and consequences, how missed BNPL payments can now affect your credit score, and how to negotiate or seek help before the situation escalates.

How Afterpay Works (and Why Missed Payments Happen)?

Afterpay lets shoppers purchase items upfront and pay the balance in four fortnightly instalments. It appears simple, but unexpected expenses, job loss, medical bills or overspending can cause payments to be missed. Late fees and account restrictions can compound the problem, making it harder to catch up.

• Orders over $40: If the first payment is late, Afterpay adds an initial $10 late fee. If still unpaid after 7 days, an additional $7 fee is applied. The total late fee is capped at 25 % of the order value or $68, whichever is lower.
• Orders $40 or less: One late fee may be charged up to 25 % of the purchase price.

Under the terms of service, Afterpay pauses your account if a payment is missed; you can’t make new purchases until the arrears are cleared. Your spending limit may also be reduced or your account may be restricted if payments remain overdue.

What Happens When You Can’t Pay?

1. Immediate Account Pause and Late Fees

When a scheduled repayment fails (e.g., insufficient funds or declined card), Afterpay automatically tries to take payment again. If the second attempt fails, a late fee is added and your account is paused for new purchases. The longer the payment remains overdue, the more likely Afterpay will apply additional late fees (up to the cap).

2. Payment Plan or Hardship Arrangement

Afterpay encourages customers facing difficulty to contact them. They offer short‑term assistance such as moving a payment date and long‑term hardship arrangements, which may involve spreading payments over a longer period and reducing repayment amounts. During a hardship arrangement, your account is paused so you cannot use the service for new purchases. This arrangement may be preferable to letting late fees accrue.

3. Collection Action and Credit Reporting

While Afterpay is not a traditional credit provider, recent regulatory changes mean BNPL is now treated like credit. Afterpay may report overdue debts or serious credit infringements to Experian Australia (formerly Illion), one of Australia’s major credit bureaus. They may disclose default information if a payment is 60 days overdue or more.

According to consumer finance site WeMoney, BNPL providers began conducting credit checks and reporting repayment history to credit bureaus after amendments to the National Consumer Credit Protection Act and ASIC’s guidelines (RG 281) came into effect in mid‑2024. Previously, BNPL activity rarely appeared on credit reports. Now, multiple missed Afterpay payments can trigger a credit enquiry and damage your credit score. However, one missed payment may not ruin your score unless it becomes a serious default.

If Afterpay cannot collect payment and you ignore reminders, they may refer your debt to a third‑party collection agency. Debt collectors must follow strict contact rules – they can’t harass you or trespass, and face‑to‑face visits are a last resort. We explain your rights below.

Does Afterpay Send Debt Collectors? Know Your Rights

Under Australian law, BNPL providers can outsource debts to licensed debt collectors if you repeatedly fail to pay. However, they must comply with guidelines set by the ACCC (Australian Competition and Consumer Commission) and ASIC. Some key rights include:

• Limited contact: Collectors may call or email to discuss payment, but they can’t call more than three times a week or ten times a month, and only during reasonable hours (7.30 am–9 pm weekdays, 9 am–9 pm weekends).
• Face‑to‑face visits: Collectors should not visit your home or workplace unless phone and email attempts have failed. Visits should occur during reasonable hours, and they must leave when asked.
• No harassment or threats: Debt collectors must treat you fairly. They cannot threaten arrest, trespass or intimidate you; if they do, lodge a complaint with the ACCC or ASIC.
• Fair negotiation: You have a right to propose payment plans based on your financial situation. Collectors must consider hardship requests and cannot misrepresent the consequences of non‑payment.

If a collector threatens legal action, remember that BNPL debts are unsecured. While they could seek a court order, this is usually a last resort. For small balances, it may be more efficient to settle the debt through negotiation or formal debt arrangements.

Can You Go Into a Debt Agreement for Afterpay Debt?

If BNPL debts, credit cards and other unsecured loans become overwhelming, a Part IX debt agreement under the Bankruptcy Act 1966 may be an option. Debt Agreements allow eligible people to make agreed repayments toward unsecured debts over a defined period, generally up to 3 years, with up to 5 years possible in certain circumstances. BNPL and other unsecured debts (credit cards, personal loans, payday loans) can generally be included.

Eligibility depends on your circumstances – you must be insolvent (unable to pay debts as they fall due), owe less than a certain threshold (approx. AU$148 k for unsecured debts) and earn below an income cap (around AU$111 k after tax). To find out if a debt agreement is right for you, consult a licensed debt agreement administrator or request a free debt assessment.

Tip: Debt agreements are legally binding. They appear on your credit file and remain on the National Personal Insolvency Index for up to five years. Consider informal arrangements or consolidation loans if your debts are smaller or you can pay them off within two years.

Practical Steps When You Can’t Pay Afterpay

1. Don’t ignore the problem – communicate with Afterpay immediately. Use the app or online portal to update your payment method and check your schedule.
2. Ask for a hardship variation – explain why you can’t pay and request more time or smaller instalments. Under their hardship policy, Afterpay may move your payment date or design a longer‑term payment plan.
3. Prioritise essential expenses – allocate funds to rent, utilities and groceries first. Use a budgeting tool to understand your cash flow.
4. Avoid taking on more BNPL orders – your Afterpay account will be paused anyway. Resist signing up with other BNPL providers; multiple missed BNPL payments can harm your credit.
5. Seek free advice – call the National Debt Helpline (1800 007 007) for confidential assistance, or connect with a qualified financial counsellor. They can negotiate with Afterpay and other creditors on your behalf.
6. Consider consolidation or formal solutions – if you have multiple debts, compare options like consolidation loans, informal arrangements or a Part IX debt agreement. Each has benefits and drawbacks; see our Debt Consolidation Loans guide and Part IX vs bankruptcy blog.

How BNPL Regulation Has Changed Since 2024

In 2024, the Australian Government introduced laws bringing BNPL under consumer credit regulation. The key changes include:

• Credit checks: BNPL providers must assess borrowers’ ability to repay, similar to personal loan lenders.
• Credit reporting: Repayment history and defaults can now be recorded on your credit file.
• Consumer protections: ASIC’s Regulatory Guide 281 requires BNPL companies to support customers experiencing hardship and to comply with responsible lending obligations.

For consumers, this means failing to pay BNPL instalments can affect future loan applications. On the positive side, responsible use of BNPL may help build a positive repayment history.

Conclusion: Don’t Let BNPL Debt Spiral

Afterpay offers convenience, but missed payments can quickly lead to late fees, account restrictions, credit reporting and potential collection action. With BNPL now regulated as credit, failing to repay can affect your creditworthiness.

If you’re struggling to make Afterpay instalments:

• Contact Afterpay immediately and ask for a hardship arrangement.
• Stay informed about your rights when dealing with debt collectors.
• Seek free advice from the National Debt Helpline or a financial counsellor.
• Consider debt consolidation or formal agreements if you have multiple debts.

Remember, the sooner you take action, the more options you’ll have to regain control. For personalised support, you can request a free debt assessment with our team.

Frequently Asked Questions (FAQs)