Arrangements with debtor

Arrangements with debtor

Acknowledgement of debt

This document records the existence and amount of the debt and why it arose. In the acknowledgement of debt, which the debtor must sign, the debtor must acknowledge their indebtedness and legal liability to pay the debt to the creditor. This document serves 2 very important purposes:

  • It is a written and signed memorandum of the debt which will make it easier to prove the debt if it is ever disputed. An acknowledgement of debt is however not a guarantee that a claim against a debtor will succeed.
  • It interrupts or suspends the effect of the Limitation Act 1980 whereby a debt may become unenforceable after 6 years from the date that the creditor had the right to recover payment form the debtor. The acknowledgement, if signed before expiry of the limitation period, has the effect of restarting the clock and making the period of 6 years run afresh from the date the acknowledgement of debt is signed.

Part payment of debt

It is up to you, the creditor, to accept such payments. If you do then you should be careful to accept such payments 'without prejudice'.

This means that you accept the part payment while reserving the right to commence court proceedings for recovery of the remainder of the debt if the debtor company neglects to pay in full.

A part payment interrupts or suspends the effect of the Limitation Act 1980 whereby a debt may become unenforceable after 6 years from the date that the creditor had the right to recover payment form the debtor. The part payment, if made before expiry of current limitation period, has the effect of restarting the clock and making the period of 6 years run afresh from the date the part payment was made.

Copyright © 2024 Epoq Group Ltd. All trademarks acknowledged, all rights reserved

This website is operated by Epoq Legal Ltd, registered in England and Wales, company number 3707955, whose registered office is at 2 Imperial Place, Maxwell Road, Borehamwood, Hertfordshire, WD6 1JN. Epoq Legal Ltd is authorised and regulated by the Solicitors Regulation Authority (SRA number 645296).

Our use of cookies

We use necessary cookies to make our site work. We would also like to set some optional cookies. We won't set these optional cookies unless you enable them. Please choose whether this site may use optional cookies by selecting 'On' or 'Off' for each category below. Using this tool will set a cookie on your device to remember your preferences.

For more detailed information about the cookies we use, see our Cookie notice.

Necessary cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Functionality cookies

We'd like to set cookies to provide you with a better customer experience. For more information on these cookies, please see our cookie notice.