A provider-funded payment plan lets a patient pay an outstanding balance in scheduled installments while your organization retains the receivable. Flywire administers the installment schedule, payment processing, and patient communications on your behalf.
This article explains what happens when a patient stops making payments and the plan ultimately defaults—including the statuses the plan moves through, the notifications the patient receives, and what happens to the remaining balance.
Good to know: Because a provider-funded plan's balance always belongs to your organization, a default does not involve any third-party financier, repurchase, or chargeback. The unpaid balance simply returns to the patient's standard self-pay balance and re-enters your normal collections workflow. (This differs from PayZen-funded plans, where a third party holds the balance.)
In this article
- The payment plan lifecycle
- Step-by-step: what happens when a payer stops paying
- What the platform does at the moment of default
- What happens to the remaining balance
- Frequently asked questions
- Need help?
The payment plan lifecycle
Every payment plan moves through three primary statuses:
| Status | What it means |
|---|---|
| Good Standing | Payments are current; no overdue installments. |
| Delinquent | One or more installments are past due and unpaid. |
| Closed | The plan has ended—either successfully completed or terminated (for example, canceled or defaulted). |
A default is one specific way a plan reaches the Closed status, recorded with a closure reason of “Defaulted.”
Step-by-step: what happens when a payer stops paying
1. A missed installment moves the plan to Delinquent
As soon as a scheduled installment is not covered, the plan is flagged Delinquent. The plan remains active, and the patient still has the opportunity to bring the account current.
2. Automatic retries and a payment-failure notification (autopay plans)
For plans set up on automatic payments, a failed charge is automatically retried. After the charge continues to fail, the patient is sent a payment-failure email prompting them to update their payment method or make a payment.
3. The plan defaults and closes
If the delinquency is not resolved, the plan is closed with a “Defaulted” reason.
Note: The number of missed payments (and the time window) that triggers a default is configured for your organization. Check your organization's plan configuration for the exact threshold.
What the platform does at the moment of default
When a plan defaults, three things happen automatically:
- The patient is notified. A “payment plan stopped” email is sent to the payer, letting them know the plan has ended.
- The balance is removed from the plan. The remaining balance is detached from the closed plan and becomes a standard outstanding patient balance again.
- The account re-enters your collections workflow. The associated bills are updated so they resume your organization's normal aging and dunning (follow-up) cycle.
What happens to the remaining balance
The unpaid balance returns to the patient as a regular self-pay balance and follows your organization's standard collections and aging process.
How this appears can vary by organization. For example, some clients route a defaulted plan to a bad-debt placement step, while others simply resume in-house aging notifications (such as 60-, 100-, and 120-day follow-ups). Your specific setup determines which path is used.
Frequently asked questions
Does the patient lose credit for payments already made?
No. All payments made before the default are applied to the balance. Only the remaining unpaid amount returns to the patient's account.
Can a patient set up a new plan after defaulting?
Yes, in most cases a patient can establish a new payment plan on the remaining balance, subject to your organization's plan rules. Once the original plan is closed, the balance is treated like any other eligible self-pay balance.
Is my organization charged back or refunded when a patient defaults?
No. Because the plan was provider-funded, your organization always held the balance. There is no third-party financier involved, so there is no chargeback or repurchase.
Will the patient be notified before the plan defaults?
Yes. For autopay plans, the patient receives a payment-failure notification after a failed charge, giving them an opportunity to resolve the issue before the plan closes.
What's the difference between a canceled and a defaulted plan?
A canceled plan is intentionally stopped (for example, by a representative or the patient). A defaulted plan is closed automatically because the patient stopped making required payments.
Need help?
If you have questions about a specific patient's plan or your organization's default and collections configuration, please contact your Flywire support representative.