debt payment
📖 What is debt payment? Meaning and definition
In New Zealand tenancy law, a debt payment arrangement is typically established when a tenant owes a landlord money for various reasons, such as unpaid rent, water rates, or filing fees. The Tenancy Tribunal can order a tenant to pay this debt, often alongside their regular rent payments, to avoid further legal action or termination of their tenancy.
These payment plans are usually structured with specific amounts allocated towards both ongoing rent and the outstanding debt. For example, a weekly payment might be split, with a portion covering the current week's rent and another portion going towards reducing the total debt. The Tribunal's order will specify the payment frequency, the start date, and how long the payments will continue until the debt is fully settled.
Crucially, the Tribunal also sets an allocation order for payments. This means that when a tenant makes a payment, the money is applied to different categories of debt in a specific sequence, such as rent first, then rent arrears, then water rates, and finally filing fees. Failure to adhere to these payment schedules, particularly for rent and rent arrears, can lead to serious consequences, including the immediate termination of the tenancy and the landlord regaining possession of the property. In some cases, the entire balance of the debt can become immediately payable if payments are missed.
📋 Requirements
- An existing debt owed by the tenant to the landlord (e.g., rent arrears, water rates, filing fees).
- A Tenancy Tribunal order specifying the debt amount and payment schedule.
- Agreement on the allocation order for how payments will be applied to different parts of the debt.
- Clear due dates and payment amounts for both rent and the debt.
📝 Procedure
- The Tenancy Tribunal determines the total amount of debt owed by the tenant.
- The Tribunal establishes a payment schedule, often combining debt repayment with ongoing rent.
- The order specifies the frequency of payments (e.g., weekly) and the start and end dates.
- An allocation order is set, dictating how payments are applied to rent, arrears, and other fees.
- The tenant makes payments according to the Tribunal's order.
- If payments are missed, the tenancy may be terminated, and the full debt may become immediately due.
💡 Examples
- A tenant is ordered to pay $14,317, consisting of rent arrears and a filing fee, through 477 weekly payments of $550, with $30 allocated to the debt and $520 for rent.
- A tenant owes $2,373.97 for rent arrears, water rates, and a filing fee, and must pay $1,000 weekly, with $200 going towards the debt and $800 for rent, until the debt is paid in full.
- Two tenants owe a company $6,241.29 and are ordered to make weekly rent payments of $760, plus a single lump sum payment for the entire debt by a specific date.
- Payments are allocated first to rent, then rent arrears, then water rates, and finally the filing fee, ensuring current rent is prioritised.
❓ Frequently asked questions
What kind of debts can be included in a debt payment order?
Debt payment orders from the Tenancy Tribunal can include various amounts owed by a tenant, such as unpaid rent (rent arrears), water rates, and reimbursement for filing fees incurred by the landlord.
How is a debt payment plan usually structured?
Often, a debt payment plan is structured so that the tenant makes regular, combined payments that cover both their ongoing rent and a portion of the outstanding debt. The Tenancy Tribunal specifies the amounts for each, the payment frequency (e.g., weekly), and the duration of the plan.
What happens if I miss a debt payment?
Missing a debt payment, especially for rent or rent arrears, can have serious consequences. The Tenancy Tribunal's order may state that if payments are not made within a few working days of the due date, the tenancy will terminate, and the landlord will regain possession of the property. The remaining balance of the debt may also become immediately payable.
How are my payments allocated when I pay both rent and debt?
The Tenancy Tribunal order will specify the order in which your payments are allocated. Typically, payments are applied first to current rent, then to rent arrears, followed by other charges like water rates, and finally to filing fees.
Can a debt payment order be changed?
The case excerpts show that orders can be amended, for example, due to errors in an earlier order. If your circumstances change significantly, you may need to seek advice on whether the order can be varied, but this is not explicitly detailed in the provided cases.
Is a debt payment order the same as a conditional termination order?
A debt payment order is often part of a conditional termination order. This means the tenancy will only continue if the tenant makes the required debt and rent payments. Failure to pay can lead to the tenancy terminating and the landlord taking immediate possession.