Debt Collection Agreement


In today’s era, it is widespread to take credit from anyone, whether a bank, friend, or any non-banking financial institution, but it is subject to some mortgage, and the kind of relationship Creditor and Debtor have between them. There are many disputes, especially in cases wherein no agreement is formulated between the Debtor and Creditor, and Debt is taken. This situation happens in most cases where the Debtor and Creditor are known to each other. Thus, this article will deal with the art of drafting a Debt Collection Agreement and its importance before moving directly to the Tips for drafting. First, have an idea about the meaning and basics of an Agreement.


A debt Collection Agreement is an Agreement that is formulated between the Debtor and the Creditor to make sure that a particular amount has been owed by the Debtor (s). Moreover, the object of this Agreement is to ascertain the terms between the Creditor and Debtor, ensuring the return of money/amount owed.

Who are the parties to an Agreement? 

Generally, this Agreement has two parties: The Debtor and the Creditor. The definition of such parties is mentioned in detail hereinbelow:

Debtor: A person (natural or juristic) that owes money.

Creditor: A person (natural or juristic) who lends money to the Debtor

When does the need for a Debt Collection Agreement arise? 

The need for such an Agreement arises where the monetary value is exchanged between the Debtor and Creditor. Thus, to record or ascertain the monetary value and to formulate ease of return of the owed amount, the Debt Collection Agreement is executed between the parties.

Why do you need to execute a Debt Collection Agreement? 

Our Debt Negotiation Lawyer states that: 

The execution of the Debt Collection Agreement provides various benefits for the Creditor and enables his right to claim the amount he has lent to Debtor. The Creditor\’s rights to seek a refund are protected under the purview of this Agreement. Moreover, there are certain cases where the Creditor wants to charge interest or penalty from the Debtor but is unable to do so because it is prohibited in local law of UAE to charge interest on the loan. Thus, in order to deal with such a situation, If the Creditor wants to set a penalty, then the clause can be mentioned in the Agreement relating to the collection of Debt which will secure the interest of the parties executing it.

Tips for Drafting of Debt Collection Agreement 

Our Commercial Contract Lawyer provides the guidance for Drafting: 

The Tips for Drafting Collection for Debt Agreement are mentioned in a chronological manner to give a better understanding to the readers:


The Agreement shall contain correct and exact details of the Debtor (s) and Creditor (s) with their passport number and EID (Emirates ID no). In addition to, the same email address and contact details shall also be mentioned, and a separate classification of the role into an agreement in front of the Names of the Parties be mentioned. For a better understanding, the format is mentioned below:





The purpose of preamble of the Agreement shall be clearly specified, and this clause is essential to understand the nature and object of the Agreement, which is executed between the parties. The Illustration for better understanding is mentioned below:


WHEREAS the Debtors owe an amount of AED________ (_________) to the Creditor as of the Effective Date.

WHEREAS the Parties are willing to settle this Debt Amount in accordance with the repayment plan as agreed between the Parties and contained herein.”


The rights about the Creditor\’s interest shall be specified in this clause which may be right for execution against the Debtor in case of non-repayment of the Debt. Moreover, the Creditor may also claim their rights in the form of Compensation/Damages against the Debtor.


This clause acknowledges between the Parties (Debtor and Creditor) that the Debt Collection Agreement supersedes all previous understanding and agreements, whether verbal or written, between the Debtor and Creditor in respect of the Debt Amount and makes the Agreement full and final in terms of understanding.


This clause will protect the Creditor as the Debtor provides a declaration that he is signing the Agreement after going through all the terms, and the Agreement is accepted willfully and with free consent.


At last, after mentioning all the above clauses, it is essential that all the parties to the Agreement shall sign it to make it enforceable

Whether Debt Collection Agreement can be notarized in UAE

Our Debt Negotiation Lawyer states that: 

Along with executing a Debt Collection Agreement, the Parties can execute an ‘Acknowledgment of Debt Letter’ in the prescribed form that a public notary in Dubai can notarize to have a legal and binding effect without leaving any scope for failure on the part of the Debtor as it shows an acknowledgment by the Debtor of the Debt owed to the Creditor. In case of default by the Debtor in repayment of Debt within 15 days of such default, the Creditor can approach the court directly for the execution of the order of arrest or travel ban against the Debtor

How can Nour Attorneys Law Firm assist you?

[/vc_column_text][vc_column_text]Nour Attorneys Law Firm has a highly qualified team of Legal Consultants who specialize in Drafting and reviewing contracts and agreements. Our team possesses exceptional skills for drafting contracts and agreements, which are capable enough to secure the interest of our Clients. Moreover, in a Debt Agreement, there are high chances of risk, so such an Agreement must be drafted in the best manner so that the interest of the Client may not be hampered. Thus, we also offer and advise all the clients to make Debtor sign the “Acknowledgment of Debit Letter’ so that appropriate actions can be taken. Our Debit Negotiation Lawyers possess’ excellent skills in negotiating with the Creditor and contesting the dispute before an appropriate forum.

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