The debt owed by a person in financial difficulty is not subject to zakah

A man borrowed three thousand riyals from his brother three years ago, and he does not think he will repay the amount because he is in financial difficulty. Is zakah due on it?
No.
No zakah is due on it as long as he is in financial difficulty; he owes no zakah until he receives it. Once he receives it, he pays zakah on it for one year only. Then, if it remains with him until the year turns over, he pays zakah for the second year, and so on. If he spends it before the second year arrives, he owes no zakah.