How can one Recover a Debt From Someone Refusing to Pay?

To begin with, one should always make a habit of recording and writing a transaction of a debt or loan. Many of us are extremely negligent in this regard hence we overlook this important Qur’anic injunction, particularly when the transaction is conducted between family members and friends.

In the longest verse of the Qur’an termed as Ayat al-Mudayana, Allah Most High says:

“O believers! When you deal with each other, in transactions involving future obligations in a fixed period of time, reduce them to writing. Let a scribe write down fairly as between the parties. Let not the scribe refuse to write as Allah Has taught him, so let him write….” (Surah al-Baqarah, V: 282)

In the time of the Messenger of Allah (Allah bless him & give him peace), most business dealings of the world were conducted verbally. People would carry out their regular transactions without resorting to written contracts and documents. In such an area, the Qur’an advised for transactions based on deferred payment to be written, so that it may be resorted to in case of mistake or refusal to pay. In an age when the written word has taken the place of verbal speech, one can have no excuse for not recording loan and deferred payment transactions. Indeed this Qur’anic injunction is not an injunction of obligation (wujub) rather of recommendation (istihbab), but its importance cannot be undermined especially in a time and age of moral decline. (See: Ma’arif al-Qur’an, 1/685 & Abu Bakr al-Jassas, Ahkam al-Qur’an, 2/205)

As such, it is extremely important to keep a record of credit-based transactions. Regardless of how insignificant the amount is or with whom the transaction is carried out, one should always form a habit of writing all the details in an unequivocal manner. At times, people shy away from writing because the transaction is with a family member or friend. This practice is incorrect and the other party should not be offended by a request from the creditor to write the transaction down. It is not about mistrusting the other party; rather it is merely a way of making sure not to commit any mistakes in the future and avoiding potential argumentation and disputes.

It is a clear fact that most money-related disputes occur between family members and close friends. The simple reason behind this is the neglect that takes place in terms of clarifying dealings between closely related people. It has been related from the early scholars that: “Remain like brothers, but transact as strangers.” (Mufti Taqi Usmani has quoted this to be a Hadith in his Urdu work Islahi Khutbat 9/82, although I could not manage to find a source for it).

One should always treat fellow human beings with love and courtesy, but monetary matters must always remain clear. Even if one intends to take a loan from one’s family members, one should write it down clearly and sign the document. If this is done, then many of our disputes and problems would disappear, insha Allah.

What to do if the borrower defaults in paying off the loan

With regards to a borrower defaulting in the payment of a loan, there are primarily two situations:

1) If the borrower is poor, insolvent, bankrupt and does not possess the means to pay off the loan, then the Qur’anic guidance is to give him respite until he becomes capable of paying it off. Allah Most High says:

“If the debtor is in a difficulty, grant him time till it is easy for him to repay. But if you remit it by way of charity, that is best for you if you only knew.” (Surah al-Baqarah, V: 280)

In the above verse, Allah Most High advises the creditor that if the reason behind a borrower defaulting is his bankruptcy, then he should be dealt with in a gentle, lenient and merciful manner until he (the borrower) has the means to pay off the debt. Contrary to the capitalistic tradition, it will not be allowed for the creditor to oppress the borrower by charging interest on the principal amount. And to forgive the loan altogether is even better. The Qur’an used the term “Sadaqa (charity)” to describe forgiving the borrower, denoting that forgiving a poor person altogether is actually an act of charity for which one will be rewarded greatly. And this (forgiving altogether) is considered by Allah Most High in the above verse to be “better” than allocating more time to pay off the loan. (Ma’arif al-Qur’an, 1/657 & Tafsir Ayaat al-Ahkam by Muhammad Ali as-Sayis, 1/208)

There are also many Hadith narrations encouraging the creditor to give respite to the one who is in difficulty.

Sayyiduna Abu Hurayra (Allah be pleased with him) narrates that the Messenger of Allah (Allah bless him & give him peace) said: “Whosoever gives respite to a borrower who is in difficulty or forgives him altogether, Allah Most High will give him refuge under the shadow of His thrown on the Day when there will be no other shadow.” (Sunan Tirmidhi, no: 1306)

Sayyiduna Abu Hurayra (Allah be pleased with him) narrates that the Messenger of Allah (Allah bless him & give him peace) said: “There was a person who gave loans to the people and said to his young servant: When you come to an bankrupt person, show him leniency so that Allah may overlook our sins. So when he met Allah, He Most High overlooked his faults (forgave him).” (Sahih Muslim, no: 1562)

Sayyiduna Abu Qatada (Allah be pleased with him) said: I heard the Messenger of Allah (Allah bless him & give him peace) say: “Whosoever desires that Allah saves him from the torments of the Day of Resurrection should give respite to the bankrupt (borrower) or forgive (his debt).” (Sahih Muslim, no: 1563)

Sayyiduna Abdullah ibn Umar (Allah be pleased with him) narrates that the Messenger of Allah (Allah bless him & give him peace) said: “Whosoever wishes that his prayer be answered and his misfortune be lifted, should give respite to an insolvent borrower.” (Musnad of Imam Ahmad, no: 4735)

The above and many other narrations related from the Messenger of Allah (Allah bless him & give him peace) encourage the creditor quite vehemently to give respite to the borrower if he is facing difficulty in paying off the loan. As such, it will be necessary to allow him the time to pay off the loan. The courts in an Islamic country will refrain from penalising him if his bankruptcy is established. However, it will still be permitted for the creditor to persevere with the borrower and keep a check on him, so that his debt is paid off.

The great Hanafi scholar, Imam Abu Bakr al-Jassas (Allah have mercy on him) gives a very beautiful and lengthy explanation in his renowned Ahkam al-Qur’an in regard to what the creditor may or may not do.

He explains that according to the Hanafi jurists (contrary to Imam Malik and Imam Shafi’i), the creditor is allowed to persevere with the borrower in regards to his loan. He may attach himself to the borrower, persist with him and keep demanding that his debt be paid off even if the borrower is poor and has nothing to pay it off with.

There are two proofs for this: Firstly, there is a Hadith narrated by Sayyida A’isha (Allah be pleased with her) that the Messenger of Allah (Allah bless him & give him peace) had purchased a camel on deferred payment from a villager. When the time of payment arrived, the villager came to demand his money. The Messenger of Allah (Allah bless him & give him peace) said, “you have come to demand your money whilst I don’t have anything to pay you with….” Upon this, the villager spoke coarsely with the Messenger of Allah (Allah bless him & give him peace). Sayyiduna Umar (Allah be pleased with him) went for him but the Messenger of Allah (Allah bless him and grant him peace) said: “Leave him alone. The one with a right is allowed to speak.” The villager was thereafter paid.

In this narration, the Messenger of Allah (Allah bless him & give him peace) declared that he had nothing to pay the villager off with, yet he said that the one with a right is allowed to speak and demand his right. This proves that bankruptcy of the borrower does not prevent the creditor from speaking and demanding his right.

The second proof is that all the abovementioned narrations concerning the virtues of giving respite to a person in genuine difficulty cannot be applied properly unless the creditor actually does something. The Hadiths state many virtues of giving respite, thus this clearly indicates that although it is allowed to demand and seek one’s loan from a bankrupt person and persevere with him, it is highly virtuous and commendable to abstain from doing so. The Hadith related by Abu Hurayra (Allah be pleased with him) states “Whosoever gives respite to a borrower who is in difficulty or forgives him altogether…….” This giving of respite cannot be achieved unless the creditor actually does something, just as he has to do something in order to forgive the loan altogether. As such, giving respite would entail abstaining from persevering with the poor borrower.

Therefore, the verse of the Qur’an: “If the debtor is in a difficulty, grant him time till it is easy for him to repay” can be understood and interpreted in two ways. It is either an obligatory injunction to give respite, in that the bankrupt poor borrower cannot be penalized and disciplined for his failure to pay off the loan, as he has a genuine reason for his non-payment. The verse could also be understood to be an injunction of recommendation, in that although the creditor may demand his debt from the poor borrower and persevere with him, it is highly recommended and rewarding to allow him time and be lenient with him until he has the means to pay. (Ahkam al-Qur’an, 2/199-201)

To summarize, the creditor and the Islamic Court must avoid penalizing and disciplining a bankrupt defaulter. However, it will be permitted for the creditor to persevere and demand his debt from the borrower so that it is paid off, although it is highly encouraged to abstain from doing so.

2) The second situation is where the borrower is rich and has the means to pay off the loan, yet he still defaults and fails to pay it off. With regards to such an individual, there are two Hadiths of the Messenger of Allah (Allah bless him & give him peace).

Sayyiduna Abu Hurayra (Allah be pleased with him) narrates that the Messenger of Allah (Allah bless him & give him peace) said: “Delay in payment on the part of a rich man is injustice/oppression.” (Sahih al-Bukhari, no: 2400)

Imam al-Bukhari (Allah have mercy on him) relates: It is mentioned that the Messenger of Allah (Allah bless him & give him peace) said: “Any delay in payment on the part of someone who has the means opens the way for his punishment and for damage to his reputation.” Sufyan said that “his reputation” means that his delay in payment is talked about and “his punishment” means his imprisonment. (Sahih al-Bukhari, 5/78)

Imam Abu Bakr al-Jassas (Allah have mercy on him) explains in his Ahkam al-Qur’an that in light of these two and other such narrations, the Fuqaha state that the rich defaulter is guilty of oppression for which he will no doubt be extremely sinful. Allah Most High says when discussing Riba: “If you do not abstain (from usurious transactions), take notice of war from Allah and His Messenger. But if you repent, you shall have your capital sums: Deal not unjustly, and you shall not be dealt with unjustly.” (al-Baqarah, V: 279) In this verse, the creditor demanding interest on the principal amount is considered to be unjust. Likewise, the borrower failing to pay the full principal amount of the debt will also be guilty of injustice. Hence, as a result of this injustice and oppression on the part of the defaulter, there are two penalties prescribed in the Hadith for him.

The first penalty is that he will be punished. All the scholars agree that “punishment” does not mean beating and physical abuse. The Qadhi or a Muslim judge cannot order the rich defaulter to be punished physically. The meaning of “punishment” is to imprison him, as related from Abdullah ibn al-Mubarak, Sufyan and most other scholars. This punishment, however, will be based upon the decree of the court and hence it will not be permitted for individuals to take a matter of law in their own hands, otherwise there would be anarchy in the society. This clearly indicates that the practice of certain individuals, of striking and physically abusing others when they fail to pay off a loan, is unlawful and a major sin. Even a Judge in an Islamic country cannot pass a judgement to have the defaulter physically abused.

The second penalty is that his reputation will be damaged. Imam Abdullah ibn al-Mubarak (Allah have mercy on him) states that the defaulter will be spoken to in a stern manner. Sufyan said that “damage to his reputation” means that his delay in payment is talked about in the community. People may be made aware that he, despite possessing the means, is failing to pay off the loan.

As far as confiscating items that belong to the rich defaulter, in principle this is allowed. The basis for its permissibility is the Hadith of Hind bint Utba, the wife of Abu Sufyan, who came to the Messenger of Allah (Allah bless him & give him peace) and complained that her husband was a miser and not providing for her. The Messenger of Allah (Allah bless him & give him peace) gave her permission to spend on herself and her children from the wealth of Abu Sufyan justly and reasonably (without his permission). (See: Sahih al-Bukhari). This Hadith indicates that if one fails to give you your right, it is permitted for you to claim it against their will.

Imam Haskafi (Allah have mercy on him) states:

“It will not be permitted for the rightful one to recover his right from other than the actual item that is owed to him. However, Imam Shafi’i has allowed this (to recover one’s right even from other than the actual item that is owed) and his position is more facilitating.”

Imam Ibn Abidin (Allah have mercy on him) comments on the above by stating:

“This impermissibility was in their (fuqaha) time. The Fatwa position today is that it will be permitted (due to moral decline).” (Radd al-Muhtar ala al-Durr, 5/300)

Based on this, many contemporary Hanafi Fuqaha have stated in their Fatawa collections that it will be permitted for the creditor to confiscate items of the defaulter and return them upon payment. It will also be permitted to recover one’s debt from the item itself by selling it, provided one does not take more than the actual amount owed by the debtor. (See: Imdad al-Fatawa, 3/446, Fatawa Mahmudiyya, 12/382 & Ahsan al-Fatawa, 7/174)

Having said the above, one must ensure not to transgress the limit set down by Shariah. It will not be permitted to violate basic human rights or break the law of the land. One cannot break into the house of the defaulter and confiscate items; neither will it be permitted to physically abuse him in order to get one’s hands on his belongings. Normally, in Islamic countries, this would be the job of the officials, hence the allowance here is only of the fact that if an item was to effortlessly come into one’s possession, it will be permitted not to give it back until the debt is paid off.

In conclusion, if the defaulter is bankrupt and poor, one should give him respite until he is able to pay off the loan, although it is permitted to persevere with him verbally, though superior to even avoid that. If the defaulter is rich, one may take his case to the court if one has the evidence. It will also be permitted to disgrace and humiliate him, although any sort of physical abuse will not be allowed. Confiscating items and recovering one’s debt from them is also an option, but without transgression and violating the law of the land.

And Allah knows best