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Creditor’s Rights and Debt Management

 

Islam has given rights and duties to every individual whether it be a parent, leader, judge, creditor, debtor or teacher. Similarly, creditor’s rights have been given great importance and significance in Islam.

Rasullullah sallallahu alayhi wasallam greatly emphasized the importance of the creditor’s rights. Consider the following narrations:

1. It has been reported from Muhammad bin Abdillah bin Jahsh radhiyallahu anhu who said, “We were sitting in the courtyard of the Musjid where the Janazas used to be placed and Rasulullah sallallahu alayhi wasallam  was sitting amongst us when he suddenly lifted his gaze towards the sky staring. Thereafter, he turned his gaze and placed his hand upon his forehead stating, ‘Subhanallah, Subhanallah, what severity has descended!’ We remained silent for that day and night but we only witnessed tranquility until the morning.” Muhammad (the narrator) then stated, “Thus I asked Rasulullah sallallahu alayhi wasallam ‘What is the severity that descended?’ He sallallahu alayhi wasallam said, ‘It was in regards to debt. By the Being in whose grasp lies the life of Muhammad sallallahu alayhi wasallam if a person is martyred in the path of Allah and then brought back to life and martyred in the path of Allah and then brought back to life and martyred again in the path of Allah and then brought back to life and he had a debt upon him, he will not enter Jannah until he repays his debt!” (Musnad Ahmad v. 5 pg. 289, Muasasa Qurtuba)

2. Abu Sa’eed Khudri radiallahu anhu reported that, “A deceased person was brought before Rasulullah sallallahu alayhi wasallam so his Janazah Salah may be performed. He sallallahu alayhi wasallam asked, ‘Is there a debt upon your companion?’ They replied, ‘Yes.’ He sallallahu alayhi wasallamsaid, ‘Has he left behind any means of repayment?’ They replied, ‘No.’ He sallallahu alayhi wasallam then said, ‘You perform Janazah Salah upon your companion.’ Ali ibn Abi Talib radhiyallahu anhu said, ‘Oh Rasulullah sallallahu alayhi wasallam, I undertake the responsibility of repaying his debt.’ Thereafter Rasulullah sallallahu alayhi wasallam came forward and performed the Salah.” (Bayhaqi Sunan Kubra v. 6 pg. 73, Majlis Da’ira al-Ma’arif al-Nizamiya)

 

3. Sa’d bin Al-Atwal radhiyallahu anhu once enquired from Rasullullah sallallahu alayhi wasallam, “My brother passed away and left behind 300 Dinars and some small children as well thus I intend to spend some of the money upon them. Rasulullah sallallahu alayhi wasallam said, ‘Your brother is being held back on account of his debt thus fulfill it on his behalf.’ Sa’d then said, ‘I went and fulfilled it for him and there only remained one woman who was claiming two Dinars for which she had no proof. He sallallahu alayhi wasallam said, ‘Give it to her for verily it is Sadaqah.” (Musnad Ahmad v. 4 pg. 136, Muasasa Qurtuba)

 

4. Rasulullah sallallahu alayhi wasallam has stated, “The undue delay of a rich person (in paying his debts) is an oppression” (Saheeh al- Bukhari, # 2287, Vol.3, Pg.94, Dar Tawq al- Najah)

 

 

We all strive to attain Barakah in our life. Barakah in one’s wealth will be achieved by doing our transactions according to the Shariah laws of Islamic finance and commerce. Barakah is “Divine blessing in one’s earning from the side of Allah (Subhanahu Wa Ta’ala).

Many factors deprive our wealth and life of Barakah. One of the major factors is not fulfilling the rights of our creditors.

It is unfortunate that many of us delay in paying our debts despite having the means to do so.  We duck and dive and claim not having the means to pay our debts. Yet, we go for Umrah with the family, buy new cars, open up new businesses and buy holiday flats. This is Zulm and oppression to the creditors. Allah (Subhanahu Wa Ta’ala) will hold us liable for all these actions.

 

We will begin to attain Barakah in our wealth only when we examine and manage our debt portfolio in accordance with the Islamic laws and principles of finance and business ethics.

Hereunder are some basic debt management tops to help us fulfill the rights of creditors and aid us in keeping our debts in order as well:

 

A person should avoid taking a loan at all costs. Debt is a burden which has the potential to torment one in his life time, and his heirs after death.

 

When deciding to take up a loan, one should ascertain the needs and try to fulfill these needs through any surplus money one has. If one has no choice but to take the loan then only borrow an amount required to fulfill those needs.

 

Evaluate and keep a record of one’s assets. This value helps in knowing the limits of one’s financial worth.

 

In order to keep afloat the credit burden, set a limit of debt-to-asset ratio. A comfortable limit is usually 50%. This means one should not undertake a debt more than the 50% worth of his assets. This way, in the worst case scenario, one can still sell off the assets to cover for the debt.

 

Keep a rigorous account of financial matters. It is our nature to forget our debts. Hence writing it down will help in tracking the rights of creditors. Constantly review this journal.

 

Avoid all interest bearing transaction. It will ruin the spiritual worth of all the assets and drag a person into poverty.

 

If one has a credit card then assure to pay all the payments in time to avoid any interest. If one does not need a credit card, then one should not keep one.

 

Undertake a loan with an honest intention of paying off. Hoodwinking a creditor may earn  some pennies and nickels, but at the cost of displeasure of Allah.

 

The creditor has the right to demand the loaned amount, even if it means he has to treat the debtor harshly. So one should not put oneself in a position where the honor is jeopardized. Pay out or make alternative arrangements.

 

If one’s repayment schedule is being disturbed due to the expenses of the lifestyle one has, then do not be ashamed to lower the lifestyle and live more simply. It is worth it!

 

Continue a close watch on all related materials on debt management, debt consolidation and debt hedging to avoid any debt crisis.

 

How Shariah Compliant are you?

 

Debentures, rebate, rollovers, collaterals, liens, mortgages, shares, bonds: a never ending list! There may be hundreds of terminologies in circulation in the financial world of today, yet these concepts were addressed by the Shariah hundreds of years ago.  The Quran, Ahadith and the books of Fiqh (jurisprudence) are rich with schemes, instruments and products far beyond what is present today.  Many of the terminologies, financial products and schemes common today are an evolved reflection of what was prevalent in the past.


Did you know?

  • The Quran has 35 verses relating to Finance and Economics.

  • Verse 2:282 is the longest verse in the Qur’an regarding Finance and Economics.

  • Revelation (wahi) concluded with the verse 2:281, warning traders in Business and Economics.  After discussing interest, Allah states:

“And fear a Day when you will be returned to Allah. Then every soul will be compensated for what it earned, and they will not be treated unjustly.”

 

Did you know?

  • The most celebrated compendium of Hadith in the Islamic world, Sahih al-Bukhari, contains 113 chapters on Finance.

  • 471 Ahadith are devoted to Finance and Economics.

 

 Hidaayah is a famous book in jurisprudence compiled by Ali ibn Abi Bakr al-Farghani al-Marghinani. It contains 24 intricate and complex chapters  addressing the following: cash sales, credit sales, spot sales, FEC’s, short sales, currency exchange, collateral, partnerships, leasing, endowments, laws of succession and many more subjects.

Many people presume that the Sahabah radiallahu anhum were poor, frail and weak.  We imagine them to be illiterate and uneducated.  However, the reality is to the contrary.  Every nation has its affluent and disadvantaged, likewise in the Sahabah there were those who were affluent and disadvantaged.  The wealthy ones were expert investors.  They had diverse investment portfolios.  They had mastered the art of trade.  The affluent ones were spearheading mass imports and exports.  They were hiring, securitising their investments, dealing in collaterals, standing as guarantors, currency trading, investing in joint commercial enterprises and other profitable schemes.  They were transacting in the millions.

Abdur Rahman Ibn Auf radiallahu anhu would import 700 camels laden with goods. He once gave 40,000 Dinars and 44,000 Dirhams in charity.  That is equivalent to a remarkable R73,328,651.42 (seventy three millon, three hundred and twenty eight thousand, six hundred and 51 Rands and 42 Cents)!! (Asad al-ghabah 3/143 Dar al-Ma’rifah)

 

Sayyiduna Zubair radiallahu anhu had an estate equalling to a staggering 52,200,000 Dirhams!  That is equivalent to R124,992,763 (one hundred and twenty four million, nine hundred and ninety two thousand, seven hundred and sixty three Rands)! (Sahih al-Bukhari)

 

Imagine the value of these amounts 1400 years ago! Is there anyone who can match up these figures today?

Shariah has considered factors which create imbalance and injustice in the elements of supply and demand.  Shariah has barred gambling, hoarding, monopolising, interest, speculative sales and all such transactions which create disharmony in the free competitive market.

The Shariah has the solutions to today’s financial crisis which are clearly expounded in the Qur’an and Ahadith.  The Shariah has an innate elasticity to recognise new financial concepts and instruments.  Allah has given us a system which is all inclusive.  The Shariah has the answers.  We need to seek the answers.

 

The Genius Design of the Human Body

 

وَفِي أَنْفُسِكُمْ أَفَلَا تُبْصِرُونَ"

 

“And (also) in yourselves (There is evidence of the truth). Can you then not see?” [Az-Zaariat 51:21]

 

Did the thought ever cross your mind on how exactly the human body functions?  The functioning of the human body is indeed a miracle of Allah. The human body is mainly based on the nervous system. The main organ that makes up the nervous system is the brain. Scientists and biologists have yet to figure out exactly how the brain functions. The brain is such an organ that gets information from the environment through the five senses. These senses take information from the environment and transform it into such information that the brain can understand. Each of these five senses function in relatively different ways:

 

1) The ears: Vibrations in the air molecules hit the part of the inner ear which is filled with fluid. Depending on the pressure it was hit by, the ear turns it into an electric signal. This signal is then sent to the brain.

 

One amazing fact about the ear is that the ear is made up of two types of receptor cells; phasic and static. The static cells are those that are always present; however, the phasic cells are those that detect changes. By these receptor cells, all the different sounds in the background are filtered out helping you focus on one thing.

 

2) The eyes: Your sight is completely dependent upon light. The light particles enter through the eye and then they are projected onto the back of the eyeball (i.e. the retina). Upon hitting the eyeball, there is the optic nerve which conducts impulses from the eyeball to the brain.

One amazing fact about the eyesight is that everyone has a blind spot. In spite of that, Allah Subhanahu wa Ta`ala has made the eyesight in such a way that the blind spot gets completely blurred out.

 

3) The nose: Different particles in the air attach to the receptor cells inside the nose. Thus, it sends the message to the brain. The sense of smelling is completely based off of how you were raised. If you grew up smelling a certain aroma, you will be used to it whereas someone else may find this aroma to be very disturbing, such as the smell of musk when a Muslim meets a non-muslim.

 

4) The tongue: The tongue functions similar to the nose. One fact to point out concerning the tongue is the way babies are always putting objects into the mouth and continuously drooling. Allah Subhanahu wa Ta`ala`s wisdom behind this is that the tongue consists of very sensitive receptor cells. Therefore, when babies put objects into their mouths, they tend to learn much more about the object as compared to simply holding it in your hands. At the same time, there are certain enzymes in the saliva that fight off the bacteria from the object. This is also why babies drool excessively.

 

5) Touch: This also functions in the same way as the nose and the tongue. The extraordinary factor in the sense of touching is when something touches the skin, not only does it send a message to the brain but it also inhibits the message of the cells around it. This comes out to be extremely useful because now the brain has a much sharper idea on where the object is located on the body.

 

 

These were just a few amazing factors regarding the five senses. Relating back to the brain, it generally has three levels of control over the body:

 

  1. 1)Voluntary (such as your hands, feet, etc.)
  2. 2)Involuntary (such as your heart, intestines, etc.) There is a lot of wisdom behind Allah Subhanahu wa Ta`ala keeping these actions involuntary. You can just imagine what would happen to an infant if he was obliged to control his heart from the moment he was born. They would surely not be able to do so.
  3. 3)Voluntary and involuntary. This is something that you can control but you don’t have to such as the lungs. When we breathe, we are actually contracting and pushing down on the muscle called the “diphragm”. This increases the space in the rib cage for the air pressure that goes into the lungs and as a result, the chest expands. When the muscles are relaxed, they go up and push down onto the lungs and that is how the air comes out.

 

This is truly amazing. If we were obliged to think about every action that we were doing, our whole life would go into just working the human body. We would never be able to concentrate or do anything else.   

 

However, there are times when the nervous system won`t have enough time to send a message to the brain. Hence, it ends up sending the message to the spinal cord. For example, if you accidently step on a needle, you will automatically lift your foot up. It doesn’t stop there. Your left foot also gets straightened out and your arms go into such a position that will help you maintain your balance. All of this takes place before the brain even realizes that you stepped on something.  If the message had been sent to the brain, it would’ve taken too long for your limbs to respond. By that time, the needle would’ve made its way pretty deep into your foot. From this we realize the miracles and bounties Allah Subhanahu wa Ta`ala has instilled just within us. Forget about our surroundings. We should take heed from this and obey the commandments of Allah Subhanahu wa Ta`ala in response to the blessings Allah Subhanahu wa Ta`ala has given us.

 

 

Written by: AbdulMannan Nizami

 

Student Darul Iftaa
Chicago, USA

 

 

 

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