I grew a papaya tree from seed about 3 years back that has been healthy and is living indoors, then over a month ago I moved it to a larger pot with fresh soil. About 2 weeks ago I noticed a 2-inch spot on the stem that had browned and sunk in a bit. Now it has spread and it appears that the trunk is constricted, and almost all leaves have fallen off. Any ideas on what could be causing this?
The new container was likely to large and has caused root rot in your tree.
Given the condition in the image, it is not likely to survive.
When repotting only go up 1 pot size. Use a commercial potting soil and make sure it drains properly.