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What Is Acknowledgement of Debt? – Complete Guide

What Is Acknowledgement Of Debt

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Are you being accused of incorrect debt? Is someone trying to put pressure on you to exert a debt you don’t deem yourself liable to pay? 

We welcome you to our guide, in which we are going to tell you all about what to do in such a situation and what is debt acknowledgement in Uk’s law.

What is the Purpose of Acknowledgement of Debt?

Debt acknowledgement serves the purpose of accepting a liability by a debtor before the expiration period, it is issued to tell the creditors that I deem myself liable to pay a certain debt and this is done through debt acceptance letter or document (AOD)

It is a legal requirement to send a reply to the creditor regarding the acceptance of debt or denial of it. 

How Do I Write an Acknowledgement of Debt?

Writing a debt acceptance letter is not a difficult task, it only requires attention to some technical details and some important points which might be linked to law. 

First of all, you need to keep in mind that this is a legal document and it must be composed without any errors and must include all relevant information, so:

  • Write it in a professional tone 
  • List down every detail regarding the dues
  • If you have any concerns, mention them

Here is a template you can use to understand the AOD document:

Address: 123 Candyland lane, Bristol 

Date: 15th September 2020

Zip Code: 06011

Subject: Debt Acceptance Letter


Dear Sir/Madam, 

I am replying towards the letter of debt sent by you to our accountant, we, therefore, accept and deem ourselves as a debtor towards your company. We have a liability for you to pay money amounting £5000, which is instilled due to a loan taken by our business from you. The payment will be made through a direct bank transfer, I urge a request of two equal instalments for the payment and I will make sure the payment is made till 25th of September

Please send an invoice to our accountant. 


John Smith


12345678 (Contact Number) 

[email protected] 

Follow us on Instagram (Optional)

*Please note that this is a template and it is not for commercial use*

Notice how some important information regarding the payment amount, payment method, payment date, and details regarding the concerned parties have been displayed?

Make sure to comprehensively express everything while you compose this legal document.  

What is Issued in Acknowledgement of Any Indebtedness?

When the acceptance of any kind of debt is made, there has to be a piece of legal evidence as a proof for it, the acceptance of a debt letter at times does work as evidence, however, a more correct way is to issue a promissory note. 

The promissory note is issued by the debtor towards the creditor. It holds all the important details regarding how and when the payment will be made.

It is similar to the acknowledgement of debt letter, however, serves a bit different purpose. 

This note has all the terms and conditions represented on it and these terms are negotiable between the debtor and the creditor. If one of the parties wants to change the terms, they are allowed to do so. 

The promissory note is used for a separate independent obligation that will be set upon the concerned people apart from any transaction or situation that gave birth to the promissory note in the first place. 

Apart from the promissory note, at times, different documents are also issued, depending on the type of debt/financing one does. 

For example, if you lend money to a company they will hand you debentures certificates. 

The debenture certificates are only issued by limited companies. Limited companies are those business entities which have a separate identity from their owners. Debenture certificates may be offered by Private and Public limited companies, as well as Limited Partnership businesses. 

A sole proprietor business owner might issue a bond of indebtedness. Both of these documents provide full details and information about the dues owed.

What is Limitation Act Acknowledgement

what is acknowledgement of debt

The limitation act has several effects on the concerned debtor and creditor. As we mentioned in the start that the acceptance of dues has to be made before the expiration period – which is 6 years – and after that, dues may not be deemed collectable. 

The section 29 (5) and 30 of the Limitation Act of 1980 states that if an AOD has been issued, the time for the recollection of the dues is renewed.


What is the limitation period?
The limitation period is the time frame after which the due amount gets expired and it is uncollectible or in simple terms, the creditor will lose their right of dues enforcement. The limitation period according to UK’s law is 6 years but if the dues were handed over by forming a way of deed, the legal limitation period lasts 12 years.
Can a written statement be filed after 90 days?
You need to file a written statement within 30 days, starting from the day of summon. If you fail to do so, a judgement against you might be passed in the court of law. I would advise the best way to carry out this matter is by taking a legal consultant’s help.
What is the statute of limitations on debt in the UK?
Statute of limitations is a civil law that has been passed to set a maximal time after which legal proceedings cannot be started. If the statute of limitations on a due amount expires, the court has no jurisdiction to adhere to the matter. However, in the UK, the statute of limitations does not apply for any criminal offences but applies to the summary offence (the offences which are tried in magistrates’ court). In regard to the dues, the limitation act of 1980 is applied where a creditor has to take legal action within 6 years.
How long before the debt becomes uncollectible in the UK?
The general time frame for dues to become uncollectible is 6 years, these 6 years will start from the last payment you have paid to your creditors or since you accepted the due amount through an AOD.
What if I don’t acknowledge my debt?
If you don’t acknowledge your dues a legal action might be taken against you by the creditor but first, a legal notice will be sent to you. If you still don’t reply to the legal notice, the creditor is in full authority to take you to the court. This might be a problem for you and will cause you to incur high amounts of legal fee and expense. If you don’t deem yourself liable for any dues, I would advise you to send a formal letter towards the creditor explaining your reasons for not accepting the money owed by you.

Final Thoughts

The UK legal system is one of the best in the world and it protects the rights of every defendant and plaintiff. 

Technicalities might pose a problem for you if you don’t try to understand them, however, if you comprehensively understand the law, it can aid to your benefit and save you from a tough situation or downfall!


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