If your income has dropped and you’re worried it won’t go back to normal, find out what you can do to reduce the risk of falling behind on your buy now pay later payments.

What to do first if you’re worried you won’t be able to afford your buy now pay later repayments

Most schemes will charge a late payment fee or interest (or both) depending on what kind of buy now pay later contract you’re on.  Missing a payment will negatively affect your credit score and could affect your ability to get credit in the future.

Some schemes will also ask you to pay anything you still owe in one go.  So if you’re going to struggle, it’s important you talk to your provider before you miss a payment. 

They could offer help including: 

• working with you to provide support before you miss any payments
• being flexible and using a full range of options to help ease any stress and anxiety you might have because of money problems 
• putting in place affordable and sustainable repayment arrangements
• taking account of your wider financial situation including debts with other lenders and essential living expenses you might have
• giving you enough time to repay and not pressurising you into repaying your debt within an unreasonably short time
• making sure your balance doesn’t get out of control once a repayment arrangement is in place
• recognising and responding to your needs if you’re vulnerable. 

If you don’t contact your lender, buy now pay later providers will usually follow this process.

1. They might first ask you to get in touch by writing to you or calling.
2. They’ll then send you a written ‘default notice’. This gives you an opportunity to arrange how to catch up with your missed payments.
3. If you don’t deal with the debt, the loan will ‘default’ (in other words, you have failed to make payments). This will usually be after two to three missed payments.
4. When the loan has ‘defaulted’, charges could be added – increasing what you owe.
5. If you still haven’t responded, your lender might go to court to seek a County Court Judgment (CCJ). In Scotland this is called a decree. A CCJ gives your lender more options to enforce repayment of the debt. These measures can seriously affect your ability to get credit with other lenders in future.
6. The debt may be sold on to a debt-collection agency who will contact you and ask for payment. However,  they are not allowed to visit your property and remove goods. If you have not paid the debt after a County Court Judgement (CCJ) has been issued, the lender can apply for a warrant of control and instruct enforcement agents (also known as bailiffs). It is only at this stage that some goods can be taken and sold to pay towards the debt.

Be careful how you use BNPL schemes 

Paying in instalments or delaying when you have to pay for your purchase can feel like a good way to manage your money, especially if you need to buy essentials. However, if you’re struggling to keep up with payments, try to avoid using them until you’re back on track. 

The more often you use instalments or delayed payments, the more likely they are to appear on your credit file. This could have a negative impact on your credit rating. 

Ask yourself if you would buy the item if it weren’t offered to you in this way. In other words, do you really need it? 

Make a budget

If you’re worried about money, and you haven’t done so already, look at what you’re spending and what income you have coming in to see if you can cut back on costs. 

If you want to cut back on bills or expenses, our guide to using comparison sites could help. If you’ve missed more than one payment or are juggling other debts, it’s important to pay them off in the right order. This is because some are more urgent, and some lenders have more power than others.

Make sure you pay off priority debts first. These are debts such as mortgage or rent arrears, and fuel bills.

Extra support if you’re struggling financially and with your mental wellbeing

Having mental health issues might mean that you struggle to make the best money-based decisions for you, as well as act on them. Remember, if you’re struggling financially and with your mental wellbeing, contact your bank or lender to discuss your options.

They should have a wellbeing team that can give you extra support. Let them know if you need this as they can’t help you if you don’t ask.  However, picking up the phone and talking about your problems is often easier said than done when you’re feeling low.

For tips on how you can manage your mental health check out Rethink’s guide. It covers everything from setting a budget to getting help if you, or someone you care about, is having a mental health crisis.