Debt is a scary word. It is a natural part of life. In our tradition, debt is not necessarily looked upon as a business. Rather, as a benefit or an act of charity. Indeed, the interest-based system of debt is explicitly prohibited in Islam. Muslims regularly engage in this system of debt for things as varied as education, healthcare, businesses and of course mortgages. The subject of this post is not about those types of debts. Whatever “halalness” or “haramness” of these, it is useful to say that these types of debts often have the benefit of being clear as to their terms and their effect when it comes to the estate.
Debt and Inheritance in the Quran
After death, debts must be paid off before any of the beneficiaries are given anything (Quran 4:11) pursuant to the Islamic Inheritance. This is made easier by the fact that student loan contracts and mortgage agreements have specific terms that deal with what happens after death. It is something that people know how to deal with, or at the very least, can figure out.
The debt that I am most concerned with is the variety that causes problems within families Or amongst friends. Frequently, this type of debt is not documented anywhere and if it is, the documentation can be inconsistent or difficult to confirm after one of the parties has died. Occasionally, basic facts about the transaction can be disputed, including whether the debt was even a debt at all or if it was a gift. If part of our all of it was forgiven or if it was repaid.
Write Down Debt
Follow the recommendation in the Quran. Make sure you have your agreements in writing. Not all debt contracts will always fit the exact description in the Quran and this is not regarded as a requirement, but do it anyway. Some family and friends agree to “pay me whenever.” Or, “if you have the money, pay me.” A lackadaisical or not especially concerned creditor loaning to family members or friends out of a sense of goodwill may be horrified to learn that their loan caused so much grief after death. Don’t be that person.
Even with the best intent, debt can be a dangerous thing. Make sure you always write down the terms. Be sure it is witnessed and all responsibilities are clear. This is not about whether you care or not. It is about if you leave a legacy of conflict or harmony. How you conduct your business affairs can lead to either result.