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What is Acknowledgment Of Debt Format?
An ‘Acknowledgement of Debt’ (AOD) is made by a company or individual who owes money to a creditor to indicate they are willing to pay what is owed when due. An Acknowledgment of Debt is a contract between a debtor and a creditor. It must comply with certain conditions that are mentioned below-
- The written document must be signed and dated by the debtor.
- The acknowledgment of debt must mention the identity of the debtor as well as that of the creditor. This means the full name; date of birth and other details of the debtor and the creditor must be mentioned in the document.
- The amount of debt must be mentioned in the document in the figure as well as in words. In case, there is a difference in the figure and words, then the amount mentioned in words will be considered.
Need for Acknowledgment Of Debt Draft Format?
Debt acknowledgment through the drafting and signing of the acknowledgment is important. It helps the debtor in holding legal proof of a debtor accepting liability before the expiration date. It is a document that is issued to confirm that the debtor owes a certain amount to the creditor and it has to be paid within a specified period at the pre-discussed rate of interest.
It is generally advised that a lawyer must be appointed for drafting the acknowledgment letter for debt. This is because they are having the knowledge and are professionals in this field. They will simplify the process for you and you will be in safe hands when it comes to declaring your dues to someone. Writing this legal document may not seem to be very difficult but it must include all sorts of technical details. Some jargon or terms specific to a situation may have to be included in the deed, which may be linked to the local legalization processes.
Since the acknowledgment of the declaration is a formal document, it must be error-free. All relevant information that must be there in the document has been listed below-
- Debtor’s full name (with the latest address)
- Creditor’s full name and details
- The amount that the debtor owes to the creditor
- A statement specifying the agreed terms and conditions of the payment of the debt by the debtor to the creditor
- The applicable interest rate
- Reference number if any of the transaction
- Creditor’s bank account details, if needed
- Terms and conditions of debt
- Consequences of failure if the said terms and conditions are not complied to
- Signature of the involved parties
The tone of the acknowledgment of debts should be formal and professional. Every detail regarding the due should be mentioned in the document. In case there is any concern regarding the debt, that should also be mentioned in the document.
FAQs for Simple Acknowledgment Of Debt Format
Q1. What are the requirements of an AOD?
Ans – In addition to a clear and undeniable admission of liability (“IOU”), the agreement should contain the payment terms, a breach clause, and the signatures of both the creditor and the debtor.
Q2. What happens if you don’t acknowledge a debt?
Ans- Ignoring or avoiding the debt collector may cause the debt collector to use other methods to try to collect the debt, including a lawsuit against you. If you are unable to agree with a debt collector, you may want to contact an attorney who can provide you with legal advice about your situation.
Q3. How long is an Acknowledgement of debt valid?
Ans- The Creditor’s claim will only prescribe after the period of three years has lapsed from the date of the acknowledgment of debt, even if the debt was admitted without prejudice.
Q4. Who signs an Acknowledgement of debt?
Ans- A Debt Acknowledgment is a document signed by one primary party, the debtor, as an acknowledgment of a specific amount of money owed to another party, the creditor.
Simple Acknowledgment Of Debt Sample Format
This is to acknowledge that a sum of Rs.___________
has been found due from me on the basis of an account settled between Mr.__________________________
Mr______________________________
Resi ________________________________________
and myself. That I undertake to repay the same within ____ months.
That I clearly acknowledge this debt which I owe to the said Mr. __________
Dated: _____________ (Signed) ______________
Address: _____________
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