What Owning Up To Debt Means

Mr A (debtor) and Mr B (creditor) enter into a credit agreement but Mr A defaults on his payments in terms of the agreement and he receives a letter of demand for immediate payment of the full amount outstanding. Mr A cannot afford to pay the full amount and he contacts the creditor in the hope of reaching a settlement. Mr A and Mr B negotiate a monthly payment plan and the creditor agrees to delay further legal action. In return, he requires that Mr A sign a document entitled "Acknowledgement of Debt". Mr A gladly does so – he has just been given room to breathe, hasn't he? But what is it that he has signed?

An acknowledgement of debt, commonly referred to as an "AOD", is a document which contains an unequivocal admission of liability by the debtor. In it the debtor acknowledges that he or she owes a particular sum of money to the creditor and undertakes to repay what is owing.