If a Muslim goes bankrupt in a commodity, only the principal is taken from him
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Fatwa number ( 21761 )
Q: A person borrowed 25,000 riyals from me on the condition that he buy me a car for the coming year, in good condition and matching the description and model. However, this person went bankrupt, and several years have passed without him repaying the debt in his liability to me due to his poverty. The brothers of the aforementioned person have volunteered to return my money. My question is: Does this involve riba, or is there a doubt in it, and is this transaction valid? I ask for an answer with evidence. May Allah reward you.
A: There is no harm in you taking your principal and waiving the forward sale of the car, whether from the borrower or from another who volunteers to pay it off on his behalf. There is no riba in that. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: A person borrowed 25,000 riyals from me on the condition that he buy me a car for the coming year, in good condition and matching the description and model. However, this person went bankrupt, and several years have passed without him repaying the debt in his liability to me due to his poverty. The brothers of the aforementioned person have volunteered to return my money. My question is: Does this involve riba, or is there a doubt in it, and is this transaction valid? I ask for an answer with evidence. May Allah reward you.
A: There is no harm in you taking your principal and waiving the forward sale of the car, whether from the borrower or from another who volunteers to pay it off on his behalf. There is no riba in that. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.