The Ruling on Deducting a Loan from Zakah

Question:
He says in another question: I am the owner of a shop, and I previously lent money to a person. Whenever I ask for the amount, he says he has nothing. Is it permissible for me to deduct what he owes from the zakah?

Answer:
No, it is not permissible for you to lose Your Excellency’s money for the sake of zakah, because zakah is a payment given to the poor. However, you should give him time until Allah provides for him to pay it, for Allah the Exalted says: So there is no hardship except with ease. Therefore, you should be patient with your brother. The Prophet (peace and blessings be upon him) said: on a day when there is no shade except His. So you are between two options: either you give him time, or you forgive him the debt and be lenient with him. As for deducting it from the zakah, that is not allowed. But if you give him from the zakah because of his poverty, and he returns that to you as payment of the debt, without any condition between you or any collusion, there is no harm. If you give him from the zakah, but he returns that money to you as payment of the debt, or part of the debt, without any collusion between you, no trickery, and no condition, there is nothing wrong with that.