WHAT OWNING UP TO DEBT MEANS
www.mondaq.com
Article Last Updated: 28 November 2013
Article by Amanda Swanson
Garlicke & Bousfield Inc.
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.
An AOD requires no more than this in order for it to be legally valid and binding on the signatory. All other terms that may be inserted in the document are incidental but generally they will be designed to protect the interests of the creditor. For instance the AOD will usually provide that if the debtor fails to pay any one installments of the debt, the whole amount will immediately become payable.
Thus an AOD is a tool commonly used by creditors when debtors owe them money because, chief among its strengths, is that it is a "liquid document", one which proves a debt without any extraneous evidence.
Accordingly an AOD should enable the creditor to obtain a speedy judgment against the debtor without having to endure a lengthy trial in which all the facts relating to the original credit agreement may have to be proved by the creditor. Judgment can simply be taken for the full amount reflected in the AOD because the court is faced with a document in which the debtor has expressly acknowledged that he owes the money.
Armed with the judgment the creditor may then issue a writ of execution against the debtor's property to the value of the judgment debt and may have the debtor's property attached to satisfy it. All of which arises directly out of the AOD signed by the debtor.
Although a debtor may not always be in a position to refuse to sign an AOD, he should always understand the implications of doing so.
TAKE CARE WHEN SIGNING AN AOD
(The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.)
EUGENE PRINSLOO
Partner
Meecham, Prinsloo & Associates
Paralegal Practitioners
INSOLVENCY - DEBT - CONSUMER PROTECTION
Tel: 0813166983 - Call/Sms/WhatsApp
Email: eugene@skuld.co.za
BBM: pin:25BC1525
Incoming search terms:
debt; credit agreement; letter of demand; acknowledgement of debt; judgment; sequestration; consumer protection; debt collection; national credit act; national credit regulator; sequestration lawyer;
_____________________________
EUGENE PRINSLOO
Partner
Meecham, Prinsloo & Associates
Paralegal Practitioners
Located on the South Coast, KZN
We offer professional assistance nationwide through a panel of expert service providers.
Call/SMS/Whats App 0813166983
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Email eugene@skuld.co.za
Fax 0862441324
Blog www.insolvencysa.blogspot.com
Websites:
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I am able to consult on the following matters:
GETTING RID OF DEBT
1) Insolvency applications.
2) Debt assessments.
3) Debt Review/Debt Counselling.
4) Debt Mediation in terms of the National Credit Act.
5) Removal of debt review, administration orders, and salary attachments/garnishee orders.
6) Credit profile clearance.
7) Any matter related to debt or debt collection where you feel you are being harassed or treated unfairly.
8) Tenant rights and eviction advice.
RENTAL MEDIATION
1) Landlord / Tenant Disputes
2) Blacklisting of bad payers
3) Credit Checks
4) Drafting of Agreements
5) Advice
ASSET PROTECTION
1) Trust registrations.
2) Business registrations.
ACQUIRING DEBT
1) Debt consolidation.
2) Buying a property, getting a home loan.
3) Second bonds.
4) Alternative property finance.
5) Advice on secured and unsecured debts. Short term loans.
6) Buying and financing a vehicle.
COLLECTING DEBT
When you are owed money, whether you are a person or business.
1) Debt collection for individuals.
2) Debt collection for business or Commercial debt collection.
3) Black listing or Default listing of debtors.
4) Debtors management.
5) Credit policy audits.
6) Debtor tracing.
CRIMINAL RECORDS
1) Verification of criminal records for employment or private use.
2) Removal of criminal records.
Disclaimer: Meecham & Prinsloo
Paralegal Practitioners cannot be held liable for any investment/legal decisions made based on the adv
