debt repayment
📖 What is debt repayment? Meaning and definition
When a tenant owes money to a landlord, such as for rent arrears, water rates, or filing fees, the Tenancy Tribunal may order a debt repayment plan. This plan outlines how the tenant must pay back the total amount owed, referred to as 'the debt', in addition to their regular rent payments.
These repayment plans are typically structured into regular instalments, such as weekly payments, with a portion allocated to the ongoing rent and another portion specifically for reducing the debt. The Tribunal specifies the amount for each payment, the frequency (e.g., every Friday or Wednesday), and the start and end dates of the payment schedule.
The order also specifies the allocation order for payments, meaning how the money received will be applied to different outstanding amounts. Common allocation orders include rent first, then rent arrears, followed by other costs like water rates or filing fees. A critical condition of these orders is that if the tenant fails to make payments as agreed, especially for rent and rent arrears, within a specified timeframe (e.g., two working days of the due date), serious consequences can follow. This might include the immediate termination of the tenancy and the landlord gaining possession of the property, or the entire remaining balance of the debt becoming immediately payable.
📋 Requirements
- An amount of money ('the debt') is owed by the tenant to the landlord.
- The debt can include rent arrears, water rates, and filing fee reimbursement.
- The Tenancy Tribunal issues an order specifying the repayment terms.
- The repayment plan includes both ongoing rent and a portion for the debt.
- A schedule for payments, including amounts, frequency, and dates, is established.
📝 Procedure
- The Tenancy Tribunal determines the total amount of 'the debt' owed by the tenant.
- The Tribunal sets a payment schedule, detailing weekly or other periodic payments.
- Each payment is split into an amount for ongoing rent and an amount for the debt.
- The order specifies the allocation of payments (e.g., rent, then rent arrears, then other fees).
- The tenant makes payments according to the schedule until the debt is cleared.
- Failure to meet payment terms can lead to tenancy termination or immediate full debt payment.
💡 Examples
- A tenant is ordered to pay $1,743.43, with weekly payments of $660 ($510 for rent and $150 for the debt) until the amount is cleared.
- A tenant owes $19,062.80 for rent arrears, water rates, and a filing fee, and must pay $1,600 weekly ($1,200 for rent and $400 for the debt) until December 2025.
- A tenant with $453.71 in rent arrears is directed to make 22 weekly payments of $194 ($174 for rent and $20 for the debt), with a final smaller payment to clear the balance.
- If a tenant misses a payment for rent and rent arrears within two working days of the due date, their tenancy may be terminated, and the landlord can take immediate possession.
❓ Frequently asked questions
What kind of debts can be included in a debt repayment plan?
Debt repayment plans typically cover rent arrears, water rates, and reimbursement for filing fees, as determined by the Tenancy Tribunal.
How are payments allocated when I pay both rent and debt?
The Tenancy Tribunal order specifies the allocation order, which commonly prioritises ongoing rent first, then rent arrears, and then other outstanding fees like water rates or filing fees.
What happens if I miss a payment on my debt repayment plan?
Missing payments, especially for rent and rent arrears, within a specified grace period (often two working days) can lead to serious consequences, such as the immediate termination of your tenancy or the entire remaining debt becoming due immediately.
Can the payment amounts be changed once an order is made?
The payment amounts and schedule are set by the Tenancy Tribunal order. Any changes would typically require a new application to the Tribunal or a mutual agreement between the parties, which should then be formalised.
How long do these debt repayment plans usually last?
The duration of a debt repayment plan depends on the total amount owed and the size of the weekly or periodic payments. Plans are scheduled until the full debt is repaid, as specified in the Tribunal's order.
Is a debt repayment plan the same as a conditional termination order?
A debt repayment plan can be part of a conditional termination order. This means the tenancy will only terminate if the tenant fails to meet the specified payment conditions, providing an opportunity to avoid termination by adhering to the plan.