Is zakah obligatory on a debtor who has goods?

Question : This is a woman asking in her question: I have goods that I sell and earn my livelihood from, so is zakah obligatory on me, knowing that I am in debt?

Answer : Yes. The stronger opinion among the views of the scholars is that zakah is obligatory on one who has zakatable wealth, even if he is in debt, because the texts indicating the obligation of zakah in zakatable wealth are general texts with no exception. No hadith, neither authentic nor weak, has come from the Messenger of Allah (peace and blessings be upon him) stating that the amount corresponding to a debt is exempted and that zakah is never obligatory on it. Rather, the Messenger (peace and blessings be upon him) would send people to collect zakah from the people of dead land and from the people of fruits, and he did not tell them to ask the people of fruits whether they had debts or not. Even though, as you heard, they were extravagant with the fruits for one or two years, and most of them would end up in debt, and their farming would not succeed except through borrowing. Yet the Messenger (peace and blessings be upon him) did not tell the people who collected the zakah to ask them if they had debts and to exempt them from the amount corresponding to the debt. When he did not say that, despite the need for it, it is known that debt is not a barrier to the obligation of zakah on one who has zakatable wealth. The statement of some jurists (may Allah have mercy on them) that zakah was made obligatory as a form of compassion, and that a debtor is not worthy of compassion, is part of what we referred to earlier as a type of juristic preference that contradicts the text.
And anything that contradicts the text is rejected and not accepted. So the correct view is that a person who has zakatable wealth, whether it is dirhams, or trade goods, or grazing livestock, or fruits, must purify it with zakah when zakah becomes obligatory on it, even if he has a debt. If we assume that a man has goods worth ten thousand riyals and he is in debt ten thousand riyals, he has a debt of ten thousand riyals, he must purify the trade goods he has with zakah.
And if he needs to pay off the debt, we give him from the zakah and pay off his debt, because he is a debtor. So praise be to Allah, Allah has not made anything difficult. We tell the one who pays zakah and has a debt: if you ever find yourself in a state of necessity where we need to pay off your debt, we will pay it off from the zakah. And based on this, we say in answer to the woman's question that it is obligatory for her to purify this wealth with which she trades, even if she has a debt.