The Ruling on the Zakah of a Debt

Al-Halabi : There is a question that was raised some time ago, in which there is a difference of opinion between us and some of our brothers, and it is the issue of zakah and debt. Is a person lending to another?

The Shaykh : Between the creditor and the debtor.
Al-Halabi : Between the creditor and the debtor. A person lent another a sum of money, let it be one thousand dinars, and this debtor kept this amount with him for about a year or a year and a half, more than the lunar year. So is the zakah on the creditor, or on the debtor, or on both of them together? Please elaborate on this issue.

The Shaykh : The answer... on both of them together, but I do not know if our friend remained.Abu Layla : Will he agree to the recording, considering that he may, Allah knows best, have more than one recording? What do you think?

The questioner : I did not record yesterday.

The Shaykh : You did not notice when I said, I said you may have more than one recording.

The questioner : Yes, more than one recording.

The Shaykh : I mean more than once. You referred to the last time, so the fact that you did not record the last time does not negate that you recorded the first time. And I am either mistaken and forgetting, or I am correct and remembering.

The questioner : By Allah, O Shaykh, you have accustomed us to the point that instead of one time, you mention other benefits in addition to the first answer.

The Shaykh : But this is called a digression. We ask Allah, Mighty and Majestic, to inspire us with the truth in what we say. First, there is no doubt that this issue is not one of the issues for which there is an explicit text from the Wise Lawgiver in the Sunnah, let alone in the Book. Therefore, like it, its ruling must be quoted or derived from the general evidence of the Shari'ah, especially in a ruling related to transactions, which are not of the nature to repeat and renew as is the case with pure acts of worship. So if we look at this rule and return to it, we find that zakah is obligatory on both the creditor and the debtor. As for the creditor, it is known among the jurists that zakah is obligatory on him, with a detail as well. This detail is based on opinion and independent legal reasoning, not on an explicit text, but we see it as correct. This detail is their statement that the debt is either alive or dead. They mean by this that either there is hope of recovering it and the right returning to the creditor, which is the alive debt, or that his hope has been cut off from his right returning to him for one reason or another from the debtor, which they call the dead debt. For the first debt, the creditor must pay its zakah, and this is known in the books of the Hanafis. For the first debt, it is not obligatory on him to pay zakah except in the case where the lost hope turns into a real hope, which is that the debtor returns to fulfilling his obligation and repays what he had borrowed from him in the past. At that time, the creditor must hasten to pay the zakah on this debt, whatever its value may be.
Al-Halabi : Whatever the number of years may be as well.

The Shaykh : Yes, that is it. As for if we return to the debtor, the situation raised earlier, and not once, is in my opinion more theoretical than practical, but it may occur for one reason or another, as is said. It is not practical because the debtor does not borrow and does not extend his hand to ask for a debt from the owner of the money except when he is in need of it. So his need for this money is completely incompatible with saving it and hoarding it such that the lunar year passes over it. But we do not deny that it may occur. And based on that, a response is necessary. I say the original ruling for this money—let us return to the rules—is this money that the debtor borrowed from the creditor, is it not his property? It has been transferred and reported to me that some say it is not his property, and this is in my opinion a deviation from hitting the target or the truth. So if we ask about this money that reached this man by the way of debt or borrowing, and ask did he possess this money? Is he its owner or not? And I have no doubt that this money, as long as it reached him by a lawful way, he is its owner, as evidenced by the fact that he has the right to dispose of it as the original owner, the creditor, disposes of his money. This is a reality in my opinion in which two people should not differ, and no two camels should butt heads over it. But if the matter reaches some people who say, out of ignorance or negligence, that this debtor is not the owner of this money, then the discussion is cut off from one who claims such a claim, and it may take another form. And if we proceed with what we claimed, that this money has been possessed by the debtor, as evidenced by the fact that he disposes of it as he wishes, for example, if it is little, he can buy a refrigerator, or if it is much, he can buy a car, and no one can oppose him in that with the claim that you are not its owner. No one claims this claim at all except if he is heedless and ignorant. If the matter is so, the known rule is that whoever owns a nisab of wealth and the lunar year passes over it, it is obligatory on him to purify it with zakah. So the fact that he is a debtor or a creditor, this is not the operative cause. The operative cause is hoarding the money and not putting it into works that have the benefits of the people. And our Lord, Mighty and Majestic, by His perfect wisdom, legislated for the owners of the nisab to purify this money with zakah. And from here we proceed to another issue, if we have finished the first issue, and in my opinion we have finished, as long as he is the owner, and as long as what he owns has reached the nisab, and as long as the lunar year has passed over this nisab, if the conditions of zakah are fulfilled for him, he must purify it with zakah. But we advise this creditor, as some merchants wish.