Do you currently have an accusation of having incorrect debt? Maybe someone is trying to pressure you over debt settlement when you don’t think you’re liable to pay. This is where we can help! In this article, we’ll give you a complete overview of debt acknowledgement, particularly the drafting of a declaration of debt. Read on!
Why is a declaration of debt in UAE necessary?
Debt acknowledgement through the drafting and signing of a declaration of debt in UAE is necessary. This is because it is a legal proof of a debtor accepting liability prior to the expiration date. It is issued in order to indicate that the creditor has accepted the liability of a debtor with the debtor deeming oneself to be liable in paying a specified amount. Take note: the acknowledgement of debt letter has to be notarized by a public notary in Dubai to be considered legal and valid in the eyes of the law.
It’s also required for a debtor to send a written response to the sender of the declaration of debt. The response can either be acceptance or denial of debt (amount specified on the document).
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Is a Lawyer required in the drafting of a declaration of debt?
Although not necessary, it’s advised to have a legal professional for the drafting of a declaration of debt document in UAE. Writing the formal legal document isn’t a difficult task; however, it has to contain technical details. There are also jargon or specific terms that may be included in the declaration, which are linked to the local legislation.
Keep in mind the declaration is a formally written legal document. It has to be drafted without errors. All relevant information must also be included. This includes:
- Name of the debtor (with latest address)
- Name and details of the creditor
- Amount owed from the creditor to be acknowledged by the debtor
- Statement related to procedure and method for debt collection or settlement
- Appropriate interest rate
- Reference number for the transaction
- Banking details of the creditor, if necessary
- Terms of the debt
- Consequences for failure to adhere to the agreed terms
- Statement acknowledging the agreement to the terms supersedes all other arrangements which the parties entered into previously
- Signatures of all relevant parties
When writing a declaration of debt in UAE, remember to write in a formal or professional tone. List down all details with regards to the dues. Should you have concerns, don’t forget to mention them.
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When is a declaration of debt required?
A declaration of debt notarized by a public notary in Dubai or anywhere in UAE is necessary for the following scenarios:
- When a company or business maintains an account with another service provider
- When a debtor is unable to fulfill payment obligations or financially unstable (the creditor can ask the debtor to sign a declaration of debt to shift the liability from the business to a specific individual)
- If the debtor is unverified or not deemed to be trustworthy due to a history of late payments
- If a debtor fails in adhering to a previously agreed date of payment or amount (a declaration of debt duly notarized will clearly state amount owed, when, how, and where debt payments have to be made, including the agreed interest rate)
- When a creditor wants to ensure a debtor is aware of terms and conditions of a transaction and avoid confusion down the line
Take note: a declaration of debt can be signed by more than one debtor. It’s also illegal to force anyone to sign an acknowledgement of debt in UAE. A public notary in Dubai will ensure that all the signatories to the legal document are not signing under duress or coercion.
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Is a promissory note the same as a debt declaration?
A promissory note is a legal document that’s issued by a debtor. It contains the important details with respect to when and how payment for amount owed will be made. It’s similar to a declaration of debt, but it serves a different purpose. The note has terms and conditions on it, but the terms are negotiable. One party can also change the terms and a creditor usually allows the changing of terms.
A promissory note is often utilized for an independent or separate obligation. Apart from a promissory note, a different type of document may also be issued. It will depend on the kind of financing provided or debt acquired. For instance, when you’re in business of lending money to businesses, debenture certificates are more appropriate to use. With debentures, they are instruments for debt. This means the debenture holder becomes a creditor of a company. A debenture certificate can only be issued by and to limited companies.
If you want to know more about the legalization or notarization of documents, contact us here in Notary Public Dubai today!