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 the magistrates courts the procedure is as follows;
(i) The creditor issues out summons and the debtor is given seven days to respond.
(ii) If the debtor enters appearance to defendant or shows interest to defend the Creditor will forthwith file an application for summary judgment indicating that the debtor has no defence to the claim. Summary judgments applications are normally heard in a space of two weeks.
(b) In the High Court the procedure is as follows
(i) The creditor issues out summons for provisional sentence which is a procedure provided for claimants with straightforward claims.
Are there any defences that can be raised by the debtor?
Indeed there are defences that can be raised by the debtor against a claim emanating from an acknowledgement of debt and the defences are as follows;
- a) The acknowledgment of debt was signed under force or duress
- b) The indebtedness was purged off
- c) Unlawfulness of the claim etc.
It is always important to get those that borrow sign acknowledgments of debts because acknowledgments of debts gives less problems when one is trying to recover what is due to him/her.
It is also important to note that an acknowledgment of debt is a legal instrument and when necessary it is advisable to seek expertise in drafting one so that it doesn’t fail on technicalities.
Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at firstname.lastname@example.org and WhatsApp 0772 997 889. Tapiwa Muhlwa is a Senior Associate, email: tapiwa@ zenaslegalpractice.com