Debt Acknowledgement Agreement

Most unpaid debts eventually become uncollectible. All 50 states have a statute of limitations on how long creditors can sue you to collect money. Depending on the state and the type of debt, it can be anywhere from two to 15 years. A debt acknowledgment agreement is an admission that you still owe the money. Signing an agreement and promising to pay may convince your creditor not to sue you for the money. However, it also gives him more time to sue.

Defining an Agreement

Each state sets its own rules for what makes a legal debt acknowledgment. In Georgia, for instance, you have to admit to your creditor, in writing, that you owe the debt. Just writing a letter or email acknowledging the debt may be agreement enough. The agreement has to make it clear which debt you're talking about. It doesn't have to specify the amount. In some states an oral acknowledgment may have the same effect.

Effects of Acknowledgment

If you give a creditor or a debt collector a valid debt acknowledgment agreement, that buys him more time to get you to pay. Suppose your state's statute of limitations for debt runs to six years and your debt is five years old. If your creditor contacts you and you write back acknowledging the debt, in many states the clock resets completely. The creditor now has six years from the date of the agreement to sue you. Some debtors make an offhand acknowledgment of the debt, not realizing it may be legally binding. If you acknowledge you owe the money, you should be prepared to pay it eventually.


About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.