Zakah on a debt owed by a wealthy person and a person in financial difficulty
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The questioner : A questioner says: If a person borrowed a sum of money from me and has not yet repaid it to me, is it obligatory for me to pay zakah on this amount?
The Shaykh : This is based on the zakah of a debt. The scholars, may Allah have mercy on them, differed regarding the obligation of zakah on a debt. Some scholars said that zakah is obligatory on a debt, whether it is owed by a person in financial difficulty or a wealthy person. This is the well-known position in the Hanbali school, may Allah have mercy on them, that zakah is obligatory on a debt even if it is owed by the most financially distressed person. The second opinion is that zakah is not obligatory on a debt, whether the debtor is rich or poor.
Because it is not in your possession. The third opinion, which is the middle one, is that if the debt is owed by a wealthy person, zakah is obligatory on it, but if it is owed by a poor person, it is not obligatory. This is because a debt owed by a poor person is like something that does not exist at all, because you are unable to demand it from him while he is in financial difficulty. In fact, you should not even raise your tongue to demand it from him if he is in financial difficulty. You must grant him a delay, as Allah the Exalted has commanded:[Al-Baqarah 2:280]. Therefore, you are not in a position to claim this money.
In this case, zakah is not obligatory on it. However, if the debt is owed by a wealthy person and you yourself delayed the demand, then zakah is obligatory on you. This is because a debt owed by a wealthy person, which you have delayed, is like it being in your possession, so zakah is obligatory on it. Then, if the debt is owed by a person in financial difficulty and you collect it, do you pay the zakah immediately for one year, or do you restart the lunar year?
There are two opinions among the scholars on this. Some said that you restart the lunar year, and you do not owe zakah until the year is completed. Others said that you pay zakah for the year in which you collected it, and then you pay zakah on it every year thereafter. This second opinion is closer to the truth.
The Shaykh : This is based on the zakah of a debt. The scholars, may Allah have mercy on them, differed regarding the obligation of zakah on a debt. Some scholars said that zakah is obligatory on a debt, whether it is owed by a person in financial difficulty or a wealthy person. This is the well-known position in the Hanbali school, may Allah have mercy on them, that zakah is obligatory on a debt even if it is owed by the most financially distressed person. The second opinion is that zakah is not obligatory on a debt, whether the debtor is rich or poor.
Because it is not in your possession. The third opinion, which is the middle one, is that if the debt is owed by a wealthy person, zakah is obligatory on it, but if it is owed by a poor person, it is not obligatory. This is because a debt owed by a poor person is like something that does not exist at all, because you are unable to demand it from him while he is in financial difficulty. In fact, you should not even raise your tongue to demand it from him if he is in financial difficulty. You must grant him a delay, as Allah the Exalted has commanded:
And if someone is in hardship, then [let there be] postponement until [a time of] ease.
وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍIn this case, zakah is not obligatory on it. However, if the debt is owed by a wealthy person and you yourself delayed the demand, then zakah is obligatory on you. This is because a debt owed by a wealthy person, which you have delayed, is like it being in your possession, so zakah is obligatory on it. Then, if the debt is owed by a person in financial difficulty and you collect it, do you pay the zakah immediately for one year, or do you restart the lunar year?
There are two opinions among the scholars on this. Some said that you restart the lunar year, and you do not owe zakah until the year is completed. Others said that you pay zakah for the year in which you collected it, and then you pay zakah on it every year thereafter. This second opinion is closer to the truth.
Source
اللقاءات الرمضانية لعام 1411هـ - 4 — binothaimeen.net (41:10)
The Arabic text is a machine transcription of the audio recording.