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What is Acknowledgment of Debt?
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. A Debt Acknowledgment Form is usually quite a short document, containing only the basic and required facts about the parties’ transaction and the monies owed. An Acknowledgment of Debt is a contract that both a debtor and creditor sign acknowledging that a debtor is indebted to the creditor and for how much as well as setting out the payment terms of paying off the debt owed.
The Terms & Conditions –
All Acknowledgment of Debts may not be identified, as the terms will vary between different debtor-creditor relationships and these terms will be set out in the contract.
Certain terms will, however, be seen frequently and will be mentioned here below to assist someone in identifying an Acknowledgment of Debt:
- Legal costs and interest – Usually there will be terms related to how interest and legal costs will be paid to the creditor;
- Payment terms and period – the term of payment as well as the installment value is usually included in an Acknowledgment of Debt;
- Breach – a breach clause explaining how a breach of the payment terms will be dealt with by the creditor;
- Acknowledgment – there will be some form of acknowledgement as to the fact that the debtor owes the creditor monies.
Need for Acknowledgment of Debt Draft Format
Debt acknowledgement through the drafting and signing of the acknowledgement is essential in the UAE. 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 of time at the pre-discussed rate of interest. It is generally advised that a lawyer must be appointed for drafting the acknowledgement letter for debt. This is because they have 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.
FAQs for Acknowledgment of Debt
Q1. What are the different types of acknowledgment?
Ans – Generally, there are two main categories of acknowledgements: professional and personal.
Q2. Is Acknowledgement receipt valid in court?
Ans -Since a receipt is a mere acknowledgement of Payment. it may be subject to explanation or contradiction. A receipt may be used as evidence against one just as any other declaration or admission.
Q3. What is the use of Acknowledgement receipt?
Ans – An acknowledging receipt, also called an acknowledgment receipt, is a document that managers and supervisors primarily use to confirm that they’ve received a document, payment or another business-related item.
Q4. What is Acknowledgement of debt in banking?
Ans – An acknowledgment of debt is a formal recognition of the existence of a debt by the debtor and an unequivocal promise by the debtor that he/she shall pay the creditor an exactly specified amount of money within certain stipulated timelines.
Q5. What is the effect of acknowledgment of debt?
Ans – An acknowledgment by a principal-debtor does not bind the surety but it has also been held that acknowledgements by the principal-debtor also keep the limitation saved against the surety.
SIMPLE FORM OF ACKNOWLEDGMENT OF A 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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