Explaining the living debt and the dead debt, and how the nisab is determined in them.

The questioner : ... meaning, for example, in our situation here, a person is a debtor and has a debt, but his debt is greater than his liability, yet the debt is known to be in the unseen, meaning this debt may be recovered or it may not. What is happening now is that everyone has it in writing, this is yours and that is mine, and consequently, in the end, it is either in his favor or against him. In this case, I do not know what merchants do, but according to the customary accounting principles, they assess this debt. In something called a doubtful debt, they make provisions. For example, I have three thousand in debt from them, say two thousand dinars are doubtful. Every year there are debts that are written off. When it becomes certain that the debt will not be collected, they write it off. So in our case, where does the determination of the nisab come in? Where do we stand regarding this assessment?

The Shaykh : Fine. The jurists divided debt into two categories and expressed it with a specific term: one is a living debt and the other is a dead debt. By the first category, they naturally mean the debt that is expected to be returned to its owner. The dead debt is one from which they have lifted their hands and washed their hands of it, either because the debtor has explicitly become unable to pay, or he has gone bankrupt, or anything that causes the creditor to despair of that debt.