payment plan
📖 What is payment plan? Meaning and definition
In New Zealand tenancy law, a payment plan is a common way for the Tenancy Tribunal to manage situations where a tenant owes money to a landlord. Instead of requiring the full amount immediately, the Tribunal may order the tenant to pay the debt, alongside ongoing rent, in smaller, manageable instalments over time. This approach aims to help tenants clear their arrears while maintaining their tenancy.
These plans typically specify the total debt, the amount of each payment, how much of each payment goes towards current rent and how much towards the debt, and the frequency and dates of these payments. For instance, a plan might require weekly payments, with a portion allocated to current rent and another portion to the outstanding debt, until the debt is fully repaid.
A critical aspect of a payment plan is the allocation order of payments. The Tribunal often specifies that payments are first allocated to current rent, then to rent arrears, and finally to other costs like filing fees. This ensures that the most immediate financial obligations are met first. Failure to adhere strictly to the payment plan, such as missing payments within a specified timeframe (e.g., two working days of the due date), can have serious consequences. It can lead to the immediate termination of the tenancy, the landlord regaining possession of the property, and the entire remaining balance of the debt becoming immediately payable and enforceable through the District Court.
📋 Requirements
- A debt is owed by the tenant to the landlord, such as rent arrears or filing fees.
- The Tenancy Tribunal issues an order specifying the payment plan.
- The plan details the total debt, the amount of each payment, and the allocation of payments (e.g., rent, then arrears, then fees).
- The plan sets out the frequency and specific due dates for payments.
- The plan includes conditions for default, such as tenancy termination or immediate payment of the remaining debt.
📝 Procedure
- The landlord applies to the Tenancy Tribunal for rent arrears or other debts.
- Both parties attend a hearing, often by remote teleconference.
- The Tribunal assesses the amount of debt owed, based on evidence like rent records.
- The Tribunal issues an order that includes a payment plan for the tenant to repay the debt.
- The tenant makes regular payments according to the plan, covering both ongoing rent and the debt.
- If the tenant fails to make payments as scheduled, the landlord may enforce the default conditions of the order.
💡 Examples
- A tenant is ordered to pay $2,307.00 in rent arrears and a filing fee, making 23 weekly payments of $780.00 (split as $680.00 for rent and $100.00 for the debt) and a final payment of $687.00.
- A tenant owes $1,743.43 and is required to make 11 weekly payments of $660.00 ($510.00 for rent and $150.00 for the debt), followed by a final payment of $603.43.
- A tenant must pay $4,410.00 in rent arrears at a rate of $50.00 per week, with the first payment on a specified Wednesday and continuing weekly until the debt is paid in full.
- If a tenant misses a payment for rent and rent arrears by two working days, their tenancy will terminate, and the landlord will get immediate possession of the premises.
❓ Frequently asked questions
What happens if I miss a payment on my payment plan?
If you fail to make a payment within the specified timeframe (often two working days of the due date), the Tenancy Tribunal order typically states that your tenancy will terminate, the landlord will regain possession, and the entire remaining balance of the debt will become immediately payable.
How is my payment allocated if I'm on a payment plan?
The Tenancy Tribunal order usually specifies the allocation order. Commonly, payments are first applied to current rent, then to rent arrears, and finally to other costs like filing fees.
Can a payment plan include both rent and other debts?
Yes, payment plans often combine ongoing rent payments with instalments for outstanding debts such as rent arrears and filing fee reimbursements, as seen in Tribunal orders.
How long do payment plans usually last?
The duration of a payment plan depends on the total debt and the agreed-upon weekly or periodic payment amount. Plans can range from a few weeks to several months, as shown in the examples provided.
What if I can't afford the payments set out in the plan?
The Tenancy Tribunal sets payment plans based on the circumstances presented at the hearing. If you are struggling to meet the terms of an existing order, it is important to seek legal advice on your options, which may include applying for a variation of the order, though this is not guaranteed.