acknowledgment of debt
Definition
An acknowledgment of debt is a written document where one person or business formally admits that they owe money to another party. It typically spells out how much is owed, when the debt was created, and sometimes how the borrower plans to repay it. Courts treat this document as strong evidence that the debt is real and valid.
Example
If a client owes you $5,000 for work you completed and they sign a written statement confirming that amount, you now have an acknowledgment of debt that you can use to collect the money if they later refuse to pay.
Watch Out
Signing one of these documents can restart the clock on the statute of limitations, meaning a debt someone thought was too old to collect on can suddenly become legally enforceable again.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.