Debt Acknowledgement and Repayment Agreement

A more formal agreement in which a debtor confirms exactly what it owes and commits to a repayment timetable. It is stronger than a simple payment plan: the debtor confirms there is no dispute, waives set-off, accepts that the whole debt becomes payable on default, agrees to pay reasonable enforcement costs, and can provide a personal guarantee from a director or owner.

It also restarts the limitation period for bringing a court claim, which is important for older debts.

• For larger debts, or where the debtor has a history of broken promises
• Where the debt is several years old and you want to protect your right to sue
• Where you want a director or owner to guarantee the company’s repayments
• When settling a disputed account – the debtor agrees a fixed figure in return for time to pay

• Fill in the parties, the debt details and the schedule
• Decide whether to include the guarantee in clause 9 – if so, the guarantor must also sign
• Decide whether to sign it as a simple agreement or as a deed (see the guidance on execution)
• Encourage the debtor (and any guarantor) to take independent advice, and record that they had the opportunity