All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
Islam came with a magnanimous divine law to all people organizing all their worldly affairs through teachings and injunctions based on the principle of preserving benefits and warding off evils, moderation, and considering their best interest since this law is sent as a mercy to the worlds.
As regards debts, Islam has dealt with this issue in a sublime sophisticated manner that preserves rights since Almighty Allah commanded recording debts in writing to preserve the rights of the creditors and prevent conflict. This is attested to in the following verse: " O ye who believe! When ye deal with each other, in transactions involving future obligations in a fixed period of time, reduce them to writing Let a scribe write down faithfully as between the parties…." {Al-Baqarah, 282}.
Here, the order to record the debt in writing takes the form of a recommendation. Imam Al-Shafie said: "Debt is a kind of sale and Allah has commanded recording it in writing in the presence of witnesses to prevent any future conflict." {Al-Umm, Vol.3:P.88}. However, this order pertains to deferred debt, not the transaction carried on the spot. Allah the Almighty says {What means}: "but if it be a transaction which ye carry out on the spot among yourselves, there is no blame on you if ye reduce it not to writing." {Al-Baqarah, 282}.
As regards the creditor, Islam has granted him some rights and privileges to preserve his rights, so it recommended that he records the debt in writing in the presence of witnesses. Islam also gave him the right to request for a mortgage. He is also granted the right to request a guarantor (Called Kafeel (The person who consolidates the guarantee of the first guarantor) by the layman) to preserve his rights. Moreover, if the creditor feared for the debt owed to him, then he has the right to request interdicting the debtor based on the rules of interdiction stipulated in Sharia. Rather, Sharia made debtors amongst the categories eligible to receive Zakah to be able to repay their debts. Allah the Almighty says {What means}: " Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of God; and for the wayfarer: (thus is it) ordained by God, and God is full of knowledge and wisdom." {At-Tawbah, 60}. This is meant to preserve the rights of the creditor in case the debtor is insolvent.
Similarly, Sharia has preserved the rights and dignity of the debtor as well, so it came with one of the greatest humanistic principles concerning debts, and that is granting the debtor time till it is easy for him to repay. Allah the Almighty says {what means}: "If the debtor is in a difficulty, grant him time Till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew." {Al-Baqarah, 280}. In this verse, granting a delay to the insolvent debtor is an obligation.
If the debtor became insolvent and couldn`t repay, Allah commanded giving him time and even recommended forgiving him. This is because the Prophet (PBUH) said, "There was a merchant who used to lend the people, and whenever his debtor was in straitened circumstances, he would say to his employees, 'Forgive him so that Allah may forgive us.' So, Allah forgave him." {Transmitted by Bukhari & Muslim}.
Sharia has also granted the debtor the right to receive Zakah to repay his debts. In addition, interdicting the debtor for being insolvent protects him, and this is why jurists have permitted him to ask for interdicting himself. This is because Islam is the religion of justice and mercy. It came to preserve rights, recommended tolerance, love, and mercy since, basically, both the debtor and the creditor are brothers in Islam, and each has their rights. And Allah the Almighty knows best.