Tawarruq and selling a debt to someone other than the one who owes it
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Fatwa number ( 19014 )
Q: I am a farmer, and I have obtained a certificate from the silos for the value of the wheat I delivered for the year 1414 AH. This certificate is redeemable in the fourth month of the year 1418 AH. Since I am in dire need of cash to settle debts that have come due on me a long time ago, and their creditors have been pressuring me, I want to take a car for the value of this certificate. For example, the car is currently worth 100,000 riyals in cash, and its owner will charge me 110,000 riyals, considering this increase as compensation for the deferred period until the fourth month of 1418 AH. What is the ruling of the Shari'ah in this matter?
A: If the intention is to sell your deferred cash held by the government for a car or anything else, this is not permissible; because selling a debt to someone other than
the one who owes it is not permissible, neither for a car nor for anything else. Therefore, what you mentioned is an invalid transaction. However, if you buy a car or anything else for a deferred price that is a debt in your possession, in order to sell it for a spot price to meet your need, this is what is called the issue of tawarruq, and the correct view is that it is permissible, on the condition that you do not sell it to the creditor from whom you bought it.
Q: I am a farmer, and I have obtained a certificate from the silos for the value of the wheat I delivered for the year 1414 AH. This certificate is redeemable in the fourth month of the year 1418 AH. Since I am in dire need of cash to settle debts that have come due on me a long time ago, and their creditors have been pressuring me, I want to take a car for the value of this certificate. For example, the car is currently worth 100,000 riyals in cash, and its owner will charge me 110,000 riyals, considering this increase as compensation for the deferred period until the fourth month of 1418 AH. What is the ruling of the Shari'ah in this matter?
A: If the intention is to sell your deferred cash held by the government for a car or anything else, this is not permissible; because selling a debt to someone other than
the one who owes it is not permissible, neither for a car nor for anything else. Therefore, what you mentioned is an invalid transaction. However, if you buy a car or anything else for a deferred price that is a debt in your possession, in order to sell it for a spot price to meet your need, this is what is called the issue of tawarruq, and the correct view is that it is permissible, on the condition that you do not sell it to the creditor from whom you bought it.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.