Acknowledgement of Debt

Being lenient with a person who owes you a debt is a morally admirable position to take, but there is always the danger that in doing so you leave yourself open to abuse and could have your debtor escape their responsibility through a legal loophole. Under the Limitation Act 1980 a creditor must take action to recover a debt owed to him within 6 years of the debt arising. If he fails to do so, he will not be able to issue legal proceedings to recover the debt. However, if the debtor acknowledges the debt, then the clock is reset and the six year period begins again.

This completely free document template serves as a means of having the debtor acknowledge the existence of the debt, thereby ensuring that their legal responsibility to pay you back will remain in place. It’s simple to fill out and a great way of ensuring your financial security.

If there is a debt which is close to being time-barred under the Limitation Act, the creditor may still agree to payment by installments instead of taking legal action, but he should require the debtor to sign an acknowledgment in order to ensure that the debt does not become time barred. The debtor should seek legal advice on the consequences of acknowledging the debt.