Zakah on a debt owed by an insolvent person
Machine translationRead the Arabic original
Question:
May Allah reward you. Honorable Shaykh, this questioner says: If I lent a sum of money to a person, and a lunar year has passed, and the money is still with them, and they have not returned it to me, is zakah due on it?
Answer:
If they are delaying payment or are insolvent, and you do not know whether they will return the money to you or are unable to do so, or if you are unable to collect it from them, then there is no zakah on it until you receive it, and then you pay zakah on it for one year. However, if this money is in the possession of people who are wealthy and willing to pay it back whenever you ask for it, then it is treated like money in your hand; you pay zakah on it every year, every time a lunar year passes. Yes.
May Allah reward you. Honorable Shaykh, this questioner says: If I lent a sum of money to a person, and a lunar year has passed, and the money is still with them, and they have not returned it to me, is zakah due on it?
Answer:
If they are delaying payment or are insolvent, and you do not know whether they will return the money to you or are unable to do so, or if you are unable to collect it from them, then there is no zakah on it until you receive it, and then you pay zakah on it for one year. However, if this money is in the possession of people who are wealthy and willing to pay it back whenever you ask for it, then it is treated like money in your hand; you pay zakah on it every year, every time a lunar year passes. Yes.
Source
نور على الدرب - الفوزان - 02/223 — archive.org (5:00)
The Arabic text is a machine transcription of the audio recording.