Debt Transferal
Its Definition
It is transferring a debt from one person’s obligation to another. For example, a person owes a debt, and another person owes him a debt that is similar to the debt that he owes. Thus, when the creditor demands repayment of his debt the first person says, “I refer you to so-and-so because he owes me a debt similar to yours, so take it from him.” If the creditor is satisfied with this, the responsibility of the debtor is absolved.
Its Ruling
Transferring of debt is permissible. It is the responsibility of the creditor to accept when the debtor refers him to a wealthy man regarding his payment. The Messenger of Allah (SAW) said:
“A rich man’s intentional delay of a debt settlement is injustice. So if one of you are referred to a wealthy man, he should accept the transferal.” (Al-Bukhari and Muslim)
The Messenger of Allah (SAW) said:
“A rich man’s intentional delay of a debt settlement is injustice. And if you are transferred to a wealthy man, then accept it.” (This was recorded by the Sunan compilers, and the wording here is that of Ibn Majah.)
Its Condition
The conditions for transferring debt are as follows:
1) The debt intended for transfer should be confirmed and it exits under the obligation of the debtor.
2) Both debts should be similar in kind, number, amount, description and payment schedule.
3) The transferor and the person to whom the debt is transferred should both consent to the transfer. This is because the transferor, although he has a duty (to repay his debt), he is not necessarily required to repay the debt by the means of transfer. Rather, he is free to choose how he will fulfill this obligation. The person who the debt is transferred to, although Islam requests him to accept it, is not required to repay the debt by mode of transfer, except as a courtesy and benevolence from him. This is because transference of the debt is not an obligatory contract. Rather, it is merely a contract meant for kindness among the Muslims.
Its Regulations
1) The person to whom the debt is transferred should be a wealthy man capable of fulfilling the payment. The Messenger of Allah (SAW) said:
“So if one of you are referred to a wealthy man, he should accept the transferal. “
( Al- Bukhari and Muslim )
2) If the debt is transferred to a person and it is found that he is bankrupt or deceased or absent for a long time, the obligation of the transferred debt will return to the obligation of the transferor.
3) If a person transfers a debt to another, while the latter transfers it to a third person, the transference in such a case is valid. This is because repeating the transfer from one to another is not harmful as long as the conditions of the transfer are valid.