diff --git a/src/backend/joanie/core/tasks/payment_schedule.py b/src/backend/joanie/core/tasks/payment_schedule.py
index 5b7c35cda..96aa23c21 100644
--- a/src/backend/joanie/core/tasks/payment_schedule.py
+++ b/src/backend/joanie/core/tasks/payment_schedule.py
@@ -51,7 +51,7 @@ def debit_pending_installment(order_id):
                     installment["id"],
                     order.id,
                 )
-                order.set_installment_error(installment)
+                order.set_installment_error(installment["id"])
                 continue
 
 
diff --git a/src/backend/joanie/tests/core/test_models_order.py b/src/backend/joanie/tests/core/test_models_order.py
index af8219713..71537c1aa 100644
--- a/src/backend/joanie/tests/core/test_models_order.py
+++ b/src/backend/joanie/tests/core/test_models_order.py
@@ -4,7 +4,7 @@
 
 # pylint: disable=too-many-lines,too-many-public-methods
 import json
-from datetime import datetime, timedelta, timezone
+from datetime import date, datetime, timedelta, timezone
 from decimal import Decimal
 from unittest import mock
 
@@ -1391,6 +1391,33 @@ def test_models_order_update_order_with_archived_course_run(self):
         self.assertEqual(order.state, enums.ORDER_STATE_COMPLETED)
         self.assertEqual(order.payment_schedule[0]["state"], enums.PAYMENT_STATE_PAID)
 
+    def test_models_order_set_installment_error_in_payment_schedule(self):
+        """
+        When passing the installment object to `set_installment_error` because of an issue with
+        the payment provider, we should be able to mark the installment in error state.
+        We should pass the `installment_id` to the method instead.
+        """
+        order = factories.OrderGeneratorFactory(
+            state=enums.ORDER_STATE_PENDING,
+            payment_schedule=[
+                {
+                    "id": "1932fbc5-d971-48aa-8fee-6d637c3154a5",
+                    "amount": "200.00",
+                    "due_date": date(2025, 10, 6),
+                    "state": PAYMENT_STATE_PENDING,
+                },
+            ],
+        )
+
+        with self.assertRaises(ValueError):
+            order.set_installment_error(order.payment_schedule)
+
+        order.set_installment_error(order.payment_schedule[0]["id"])
+
+        order.refresh_from_db()
+
+        self.assertEqual(order.payment_schedule[0]["state"], enums.PAYMENT_STATE_ERROR)
+
     def test_models_order_and_offering_rule_discounted_rate_get_discounted_price(self):
         """
         When the offering rule that has a discount rate, is active and is enabled then the order