What One Needs To Know About An Acknowledgment Of Debt.

• Published date: 29 June 2022
• Subject Matter: Finance and Banking, Financial Services
• Law Firm: ChimwaMurombe Legal Practice
• Author: Mr Fungai Chimwamurombe and Tapiwa Muhlwa

Introduction

Plautus once said, "What you lend is lost; when you ask for it back, you may find a friend made an enemy by your kindness. If you begin to press him further, you have the choice of two things - either to lose your loan or lose your friend." This aptly sums up the risks involved in lending to an extent that others might never want to lend their money as this creates an atmosphere of uncertainty in lenders. It is because of this uncertainty posed by lending that people ought to put in place ways and means which guarantee that whatever is advanced is returned. One way of guaranteeing certainty and fewer difficulties in the recovery of debts is by having a party borrowing sign an acknowledgment of debt.

What is an acknowledgment of debt?

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. An acknowledgment of debt should however be signed freely and voluntarily by the debtor otherwise if force or duress can be established, it then becomes an unbinding document.

What are the advantages of getting a debtor sign an acknowledgement of debt?

There are a number of advantages associated with securing an acknowledgment of debt in your favour as a creditor and these are;

(a) Interruption of the prescription which is set at three years for ordinary debts.

(b) It gives the creditor the right to sue on the acknowledgment of debt without having to necessarily go back to the original transaction.

(c) An acknowledgment of debt is a liquid document and there is a shortened procedure in the courts of recovering one's money as shall be demonstrated below.

(d) Onus of disputing the acknowledgment is always on the debtor.

How to sue on an acknowledgment of debt?

(a) In...