Acknowledgement of debt letter format

The letter format

This is written to be issued on the debtor's letterhead and signed by them. Send it pre-filled so they only need to sign and stamp.

[DEBTOR'S LETTERHEAD]
[DEBTOR LEGAL NAME]
[ADDRESS] | GSTIN: [DEBTOR GSTIN]

Date: [DATE]

To,
[CREDITOR NAME]
[CREDITOR ADDRESS]

Subject: Acknowledgement of amount payable

Dear Sir/Madam,

1. We, [DEBTOR LEGAL NAME], acknowledge and confirm that a sum of Rs [AMOUNT IN FIGURES] (Rupees [AMOUNT IN WORDS] only) is due and payable by us to [CREDITOR NAME] as on [DATE], towards [supply of goods / services] under the following invoices:

[INVOICE NO.] dated [DATE] for Rs [AMOUNT]
[INVOICE NO.] dated [DATE] for Rs [AMOUNT]
(as per the statement of account enclosed, which we have checked and confirm)

2. We have no dispute or counter-claim in respect of the above amount. [Or, if any: Except for [DESCRIBE], which is to be settled separately, we have no dispute.]

3. We undertake to pay the above amount [in full by [DATE] / in instalments as follows: Rs [AMOUNT] by [DATE]; Rs [AMOUNT] by [DATE]].

4. [Optional: Interest at [RATE]% per annum on delayed instalments will be payable as agreed.]

For [DEBTOR LEGAL NAME]

[SIGNATURE]
Name: [AUTHORISED SIGNATORY NAME]
Designation: [PROPRIETOR / PARTNER / DIRECTOR]
[COMPANY SEAL / STAMP]

Place: [PLACE]

How to fill it

1. Prepare a reconciled statement of account first and attach it, so the amount cannot be disputed later.
2. Put the debtor's exact legal name and GSTIN. For a company, the signatory should be a director or an officer authorised to admit liabilities.
3. Fill in the date of signing. The fresh limitation period runs from that date.
4. Keep paragraph 3 realistic. A payment date the debtor believes in gets signed; an impossible one does not.
5. Collect the signed original, or at least a signed scan from the debtor's official email, and file it with the invoices.

Common mistakes

• Waiting until after three years. Section 18 needs the acknowledgement to be signed before the period expires; use the limitation period calculator to check.
• Accepting an unsigned email or a WhatsApp voice note. Courts look for a signed writing; an email from the debtor's official address may be treated as signed electronically, but a signed letter avoids argument.
• Getting it signed by a junior employee with no authority to admit company liabilities.
• Wording that is conditional ("we will pay once our client pays us"). Courts have held conditional statements can still be acknowledgements, but a clear admission is safer.

How to get it signed and what happens next

Debtors sign acknowledgements most readily as part of a payment plan or year-end balance confirmation. A useful approach: send it with your proposal for instalments, or as part of your annual ledger confirmation. A part payment made before expiry, recorded in writing signed by the payer, also gives a fresh period under Section 19.

Once signed, you have a strong document for a summary suit under Order XXXVII CPC if the debtor defaults, because the defendant will struggle to show a triable defence against its own written admission. If the debtor refuses to sign anything, take that as a signal to move to a legal notice before limitation runs out.