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Bankruptcy

Last updated: 15th April 2020
Question ID: #4548
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Salaam, I wanted to know in bankruptcy is allowed in Islam and the conditions in which it is allowed? I have debt that accumulated over 2 years I used credit cards at 0% into rates to handle everyday things including house repairs of a house that was falling apart. I was not able to get a good job during the 2 years to wipe the debt before the 0% runs out. I have a good job now but interest rates that are 17% - 26% which makes it difficult to pay back it will take me next 4 - 5 years. If I do debt consolidation that will lower the interest rates but I will still be paying interest. Can I file for chapter 7 bankruptcy? Companies do not take money back after chapter 7 even if I tried to pay them back after the bankruptcy completed. Will that debt still be mine and I will be liable in the hereafter? Thank you, Salaam


بسم الله الرحمن الرحيم

الجواب حامداومصليا

When you are unable to pay a debt you can declare yourself as bankrupt. However, when you become well-off and able to pay back then you must do so immediately.

Abu Huraira RA reported: The Messenger of Allah, صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ said, “Delayed payment by a rich person is an act of injustice.”

You should make Tawba (repentance) as you have committed yourself in this Riba contract. If you can avoid paying back interest then you should do so, otherwise if your force to then you have to pay it, whilst hating it in your heart.

Also, it is not proper to intentionally declare bankruptcy. So you should not file for chapter 7 bankruptcy.

In principle, the debt will not be written off unless the creditors rescind the contract of debt. if the creditors make demands you will still have to repay when you can afford it.

And Allah knows best

05 Rabiul Awwal 1442/ 22 October 2020
Mufti
Answer last updated on:
26th October 2020
Answered by:
Ulamaa ID 04
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Location: London
Mufti Qamruzzaman

London, UK