A person whose trade is installment sales — that is, car installments — and whose customers are of two types: one type pays regularly, and the other type lets years pass without paying
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The questioner : He says: A person whose trade is installment sales — that is, car installments — and whose customers are of two types: one type pays regularly, and the other type lets years pass without paying. The question is: How does he pay zakah on this money? Does it apply...
The Shaykh : Is it?
The questioner : How does he pay zakah on this money? Does the issue of the insolvent and the solvent apply to the second type, or are they trade goods? And how does he pay zakah on the first type? Is the two-year period one single lunar year, or what is the case?
The Shaykh : Yes. As for the first one, who pays when the debt is due, he is solvent. It is obligatory for a person to pay zakah on the debt in his liability along with his money. If he wishes, he can record it, and when he receives the debt, he pays zakah for the time that has passed. As for the second one: the one who cannot pay when the installment is due and has nothing, he is insolvent. There is no zakah obligatory on his debt. But if he receives his debt, he pays zakah for one year. Even if years have passed, because the rule regarding debts is as follows: Zakah is obligatory on debts owed by solvents every year. But the creditor has the choice between paying the zakah with his money or waiting until he receives it and then paying zakah for the time that has passed. As for the second type: debts owed by the insolvent, there is no zakah on them. But if a person receives them, he pays zakah on them once. So if it happens that a person has ten thousand riyals owed to him by a poor person, and the ten thousand remained with this poor person for ten years. But Allah granted him wealth and he paid it off, then there is no zakah on the creditor except once. Yes.
The Shaykh : Is it?
The questioner : How does he pay zakah on this money? Does the issue of the insolvent and the solvent apply to the second type, or are they trade goods? And how does he pay zakah on the first type? Is the two-year period one single lunar year, or what is the case?
The Shaykh : Yes. As for the first one, who pays when the debt is due, he is solvent. It is obligatory for a person to pay zakah on the debt in his liability along with his money. If he wishes, he can record it, and when he receives the debt, he pays zakah for the time that has passed. As for the second one: the one who cannot pay when the installment is due and has nothing, he is insolvent. There is no zakah obligatory on his debt. But if he receives his debt, he pays zakah for one year. Even if years have passed, because the rule regarding debts is as follows: Zakah is obligatory on debts owed by solvents every year. But the creditor has the choice between paying the zakah with his money or waiting until he receives it and then paying zakah for the time that has passed. As for the second type: debts owed by the insolvent, there is no zakah on them. But if a person receives them, he pays zakah on them once. So if it happens that a person has ten thousand riyals owed to him by a poor person, and the ten thousand remained with this poor person for ten years. But Allah granted him wealth and he paid it off, then there is no zakah on the creditor except once. Yes.