debt repayment plan
📖 What is debt repayment plan? Meaning and definition
A debt repayment plan is a formal schedule set by the Tenancy Tribunal, outlining how a tenant must pay off a specific amount of money owed to their landlord. This debt can include rent arrears, water rates, glazing costs, or filing fees. The plan usually involves regular, often weekly, payments that combine both the current rent and an additional amount specifically for the debt.
The Tenancy Tribunal orders these plans to ensure that the tenant systematically reduces their outstanding debt while continuing to meet their ongoing rental obligations. The orders specify the exact amount of each payment, how much goes towards rent, and how much goes towards the debt. They also set out the frequency of payments, the start date, and the end date.
Crucially, these plans often come with conditions. If a tenant fails to make the required payments for both rent and the debt instalments within a specified timeframe (e.g., two working days of the due date), serious consequences can follow. These can include the immediate termination of the tenancy, meaning the landlord gets immediate possession of the property, and the entire remaining balance of the debt becoming payable straight away.
The Tribunal also dictates the order in which payments are allocated. Typically, payments are applied first to current rent, then to rent arrears, and then to other costs like glazing or filing fees. This ensures that the most critical ongoing obligation (current rent) is prioritised.
📋 Requirements
- A debt must be owed by the tenant to the landlord (e.g., rent arrears, water rates, glazing costs, filing fees).
- The Tenancy Tribunal must issue an order detailing the repayment schedule.
- The order specifies the total debt amount and how it is broken down.
- The plan includes regular payments that cover both ongoing rent and an instalment towards the debt.
- The order defines the payment frequency, start date, and end date for the plan.
- The order outlines the consequences if the tenant fails to meet the payment terms.
📝 Procedure
- The Tenancy Tribunal determines the total amount of debt owed by the tenant to the landlord.
- The Tribunal sets the weekly or other periodic payment amount, specifying how much is for rent and how much is for the debt.
- The Tribunal establishes the payment schedule, including the first payment date and the final payment date.
- The Tribunal specifies the order in which payments will be allocated (e.g., rent, then rent arrears, then other costs).
- The Tribunal includes conditions for failure to pay, such as tenancy termination and immediate payment of the remaining debt.
💡 Examples
- A tenant owes $3,986.14 for rent arrears and glazing costs, and the Tribunal orders them to pay 113 weekly payments of $354.00 (comprising $319.00 for rent and $35.00 for the debt), with a final payment of $350.14.
- A tenant is ordered to pay $4,947.00 in debt through 109 weekly payments of $365.00, which includes $320.00 for rent and $45.00 for the debt, with a final payment of $362.00.
- A tenant with $5,241.85 in rent arrears, water rates, and a filing fee is directed to make weekly payments of $1,000.00, with $750.00 allocated to rent and $250.00 to the debt, until the debt is cleared.
- If a tenant misses a payment for rent and a debt instalment within two working days, their tenancy will end, and the landlord will regain possession of the property, with the full remaining debt becoming immediately due.
❓ Frequently asked questions
What kind of debt can be included in a repayment plan?
A debt repayment plan can cover various amounts owed by a tenant, such as rent arrears, water rates, costs for property damage like glazing, and Tenancy Tribunal filing fees.
How are payments structured in a debt repayment plan?
Payments are typically made weekly and include two parts: one portion for your ongoing rent and another specific portion that goes towards reducing the outstanding debt. The Tenancy Tribunal order will clearly state these amounts.
What happens if I miss a payment under a debt repayment plan?
If you miss a payment for both rent and a debt instalment within a few working days of the due date, the Tenancy Tribunal order often states that your tenancy will terminate, the landlord will get immediate possession, and the entire remaining debt will become payable at once.
How does the landlord allocate my payments?
The Tenancy Tribunal order specifies the allocation order. Usually, payments are applied first to current rent, then to any rent arrears, and then to other specific costs like glazing or filing fees.
Can the payment amounts change if my rent changes?
Yes, some orders include a clause that if the current rent is varied by the landlord, the weekly payments will be adjusted so that the tenant continues to pay the current rent plus the agreed-upon weekly amount for the debt.
Where can I get help if I'm struggling to meet my debt repayment plan?
If you are finding it difficult to meet the terms of a Tenancy Tribunal ordered debt repayment plan, it is advisable to seek legal advice from a qualified lawyer or contact a community law centre for assistance.