Acknowlegement of Debt: “Promises make debt, and debt makes promises”
An acknowledgement of debt (“AOD”) is when a debtor admits his debt
responsibilities. The debtor admits that he be indebted a sum of money to the
creditor and accepts to reimburse the amount on terms agreed upon amongst the
“Speak not of my debts unless you mean to pay them” (quote by George Herbett).
1. WHEN AN AOD IS REQUIRED:
1.1. if a company has an account with a service provider, but the company
is financially unbalanced and incapable to fulfil their payment, an AOD
can be signed and accountability shifts from the company to an
individual. This is like surety, although an AOD is not compulsory. “A
billion here, a billion there, sooner or later it adds up to real money”
(quote by Everett Dirksen).
1.2. If you don’t have confidence that the debtor will maintain payments or
times past where payments have been in arrears. “Debts and lies are
generally mixed together” (quote by Francois Rabelais)
1.3. If the debtor fails to follow to an agreed amount or date of payment.
The AOD will undoubtedly state when, where, in what way and the
amount owing, as well as the suitable interest rate. This is to guarantee
that the debtor is fully mindful of all terms and conditions, circumventing
“Good times are when people make debts to pay in bad times” (quote by
2. LIMITS LONG DRAWN OUT LEGAL PROCESS
An AOD would be of great value should the debtor defaulting and a summons
is required. This means that the creditor need not essentially issue a
summons, which means that the litigious process is settled much preferably
than it would have been.
3. TIPS TO GUARANTEE EFFECTIVE AOD
From a profitable viewpoint these contracts are essentially vital and as such
the beneath are some imperative tips in order to guarantee that the all-out
benefits obtainable to creditors are secured:
3.1. As a debtor must comprehend the particular contents thereof
3.2. The debtor must confirm that he pays the arranged repayment on time
and in full each and every month and failing to do so will result in
judgment may be taken and listed against his credit record.
3.3. In AOD’s a provision is further confined concerning the compensation
of legal costs and interest. “Interest on debts grow without rain” (quote
by Yiddish Proverb). It is vital to warrant that the legal costs have been
wholly clarified and the tariff on which it is based is fully divulged to him.
3.4. You, as a creditor, need to warrant that the AOD is fully all-inclusive in
terms of the amount owing and that the banking particulars are precise
and stated therein.
It is important that these documents are drafted by professionals in order to
guarantee that they most suitably protect your rights.
“Today, there are three kinds of people: the have’s, the have-not’s, and the havenot-
paid-for-what-they-have’s” (quote by Earl Wilson
NOTE: This article has been written for information purposes only. It should be noted that each case depends on merits of matter and should be consulted with an attorney before launching legal action!