Subject : Islamic Solutions to Insolvent Debtor and the Reward of the Patient Creditor
Fatwa Number : 3681
Date : 06-02-2022
Classified : Usury (interest) &Loans
Fatwa Type : Search Fatawaa

Question :

What are the solutions offered by Islamic Law regarding debt repayment or postponement in light of the difficult economic circumstances? Also, what is the reward of the creditor who forgives the debtor?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon Prophet Mohammad and upon all his family and companions.

In principle, debts are financial rights for which debtors are liable once their date is due where it isn`t lawful for a rich debtor not to repay the debt once he is able to do so since the Messenger (Peace and blessings be upon him) considered this injustice. He (Peace and blessings be upon him) said: "Delay in payment by a rich man is injustice." {Bukhari & Muslim}. In addition, a debt is a donation given by the creditor to the debtor to be repaid without any increase on the original amount. Therefore, the reward of this act of goodness should be nothing except goodness or else people will refrain from loaning money because they don`t trust that their money will be repaid to them, which, according to experts, harms the individual, society, and the economy.

Therefore, Islamic Law obligates debt repayment when its date is due and recommends recording that in writing in the presence of witnesses to preserve rights. Allah the Almighty says {What means}: " 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:.." He the Almighty also says {What means}:"…….. and get two witnesses, out of your own men, and if there are not two men, then a man and two women, such as ye choose, for witnesses, so that if one of them errs, the other can remind her." {al-Baqarah, 280}.

A debtor may get overburdened with debts and fail to repay them, which is the definition of the insolvent debtor according to Islamic Law. However, Islamic Law offers solutions out of this dilemma, such as obligating the creditor to grant the debtor time till it is easy for the latter to pay or remit it by way of charity, and the former will be greatly rewarded for that. 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}. For more details, kindly check {Madarik At-Tanzeel, Vol.2:P.226 by Imam An-Nasfie (May Allah have mercy on him)}.

This same view is emphasized in the Prophetic Sunnah. Abu Hurairah (May Allah be pleased with him) reported: The Messenger of Allah (Peace and blessings be upon him) said, "There was a person who used to loan money to the people and he used to say to his servant: 'When an insolvent person comes to you, show him leniency so that Allah may forbear our faults.' So when he met Allah (i.e., when he died), Allah forgave him."[Al-Bukhari and Muslim].

One of the solutions offered by Islamic Law to the insolvent debtor is giving him from the Zakah (Alms/obligatory charity) in case he meets the conditions as an eligible recipient (Those in debt). 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-Tawbeh, 60}.

An indebted person is the one who had borrowed money for a lawful matter and couldn`t repay on due date, so it is permissible to give him from the Zakah to help him settle that debt.

In conclusion, people should show mercy to each other, forgive, give assistance, and grant time to the debtor till it is easy for him to repay, or forgive the debt altogether. And Allah the Almighty knows best.



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