BENEFIT 2: The Sale of Debt-for-Debt

(بيع الدين بالدين) _ 1⃣. Definition of ٌدَيْن (Debt) Debt ٌدَيْن refers to any obligation that is established in one’s liability (dhimmah), whether due immediately (حالًّا) or deferred (مؤجَّلًا). Example of an immediate debt: This occurs when payment is expected immediately as per the original agreement, but the buyer either does not pay or delays the payment. Example of a deferred debt: Two parties agree on a sale where the payment is deferred until a specified time. This is a deferred debt. NOTE: Debt also includes قَرْض "benevolent loans" not arising from a sale) ____ 2⃣. Ruling on Selling Debt for Debt This type of transaction is IMPERMISSIBLE by concensus! Ibn Al-Qattān, may Allāh have mercy on him, stated: «أجمع كل من يحفظ عنه من أهل العلم، على أن بيع الدين بالدين لا يجوز» "There is consensus among all scholars whose opinions are known that selling debt for debt is not permissible." [Al-Iqna‘ fi Masā'l Al-Ijma‘, 2/234)] NOTE: Al-Athram narrated from Aḥmad that when asked whether there was any authentic ḥadith on this matter, he replied: 'No.'” [Al-Mughni, 4/37]. Most scholars have declared the ḥadīth of Ibn 'Umar to be inauthentic, in which the Prophet ﷺ: ((نهى عن بيع الكالئ بالكالئ)) "forbade selling 'kāliʾ bil kāliʾ,” which Nāfi' interpreted as referring to the practice of selling debt for debt." ____ 3⃣. Forms of Selling Debt for Debt There are various forms of selling debt for debt, but before mentioning them it is essential to differentiate between: 1. Selling debt for cash (i.e., immediate settlement), which is a different matter. 2. Selling debt for debt, where both the price and the item owed are deferred. This is the focus of our discussion. ▪️Scholars categorise selling debt for debt into four cases: 1. دين واجب بدين واجب Selling a due debt for another due debt 2. دين ساقط بدين ساقط Selling a discharged debt for another discharged debt 3. دين واجب بدين ساقط Selling a due debt for a discharged debt 4. دين ساقط بدين واجب Selling a discharged debt for a due debt KEY TERMS: ▪️Due Debt (دين واجب): A debt that becomes binding at the time of the contract and did not exist prior. Example: Person A sells a bottle of water costing £1 to person B on credit. This is a debt that becomes obligatory at the time of the contract. ▪️ Discharged Debt (دين ساقط): A pre-existing debt that is settled or discharged through a subsequent transaction. Example: Person A owes person B a debt. Person B agrees to cancel the debt mid-term in exchange for a physical item, such as a pair of trainers. ____ 4⃣. Explaining the Four Cases BENEFIT: To differentiate between the price (الثمن) and the item being sold (المثمَن), we follow the rule that the item placed after the preposition "بـ" (translated as "for") is regarded as the price. 1. دين واجب بدين واجب Selling Due Debt for Another Due Debt This occurs when both the price and the item being purchased are deferred. For example, a person sells five books on credit in exchange for £100, both being deferred. This is unanimously prohibited, as advance payment is required for a 'Salam' contract to be valid. 2. دين ساقط بدين ساقط Selling Discharged Debt for Discharged Debt This involves offsetting debts between two parties. For instance, person A owes person B £100, and person B owes person A £50. They mutually agree to cancel the respective amounts. This practice is known in Fiqh terms as المقاصّة (offsetting). This is an issue of differing among the scholars. The prevailing opinion in the Hanbali school is that it is invalid unless the debts are of the same type (نوع) and nature (جنس). If they differ in type or nature, mutual cancellation is prohibited.