Is it obligatory to pay zakah on amounts owed to one by others?

Question:
Regarding zakah, if I have a sum of money in my possession and another sum with people who borrowed it from me and have not repaid it, do I pay the zakah on both amounts from the money I have, or do I pay the zakah only on the money in my possession? And what should I do?

Answer:
You are required to pay the zakah on the money in your possession. As for the money with people, the ruling is as follows: if they are able to pay, such as students who were lent money, you must pay zakah on what is with them. However, if they are insolvent and poor, unable to repay you, or if they are evasive and delay paying you without giving you your right, then you do not owe zakah until you receive it. Once you receive it, you will pay zakah on it in the future, starting a new lunar year of possession from that point. If you pay zakah on it for one of the past years, this is a view held by some scholars and it is good, but you are not obligated to do so except for the future. When you receive this money from the insolvent or evasive people, you start a new lunar year with it. Once a lunar year has passed after receiving it, you pay zakah on it thereafter. If you pay zakah on it after receiving it for only one year, this is a good opinion, and some scholars hold this view. This is also reported from 'Amr ibn 'Abd al-'Aziz (may Allah have mercy on him) and his companions. Yes.