3. دين واجب بدين ساقط

Selling Due Debt for Discharged Debt For example, person A is owed £1,000 by person B. To settle this, they agree to enter into a Salam contract for 50 copies of فقه الميسر. As per the rules of Salam, the price must be paid in advance. Person A, however, proposes not to pay the price upfront but to instead treat the £1,000 owed to him as the payment for the Salam transaction. According to the Hanbali madh-hab, this is invalid. This practice is known in Fiqh terms as (السلم بثمن ثابت في الذمة) 'Salam' transaction based on a fixed debt. NOTE: Contemporary financial institutions, particularly banks, frequently engage in similar practices under the guise of "reverse Tawarruq," a method used to restructure debts. However, the prevailing scholarly opinion holds that such transactions are impermissible, except under specific conditions, which are often not met by banks. 4. دين ساقط بدين واجب Selling Discharged Debt for Due Debt An example of this is when person A owes person B £1,000 which he has to pay tomorrow. person A proposes to settle this debt with an obligation that person B pays £1,200 after one year, this constitutes selling the debt to the debtor himself. Conclusion: According to the Hanbali madh-hab, all four cases described above are invalid. However, exceptions are noted in two cases: 1. Presence of One of the Two items During The Contract Meeting: If one of the two items is presented during the meeting, the transaction is treated as a sale of debt for tangible goods, which is permissible. 2. If the Debt is an Amanah (Trust), Not a Debt: If the item owed is a trust rather than a debt, the transaction is considered valid. This is because trusts are treated as physically present items, unlike loans, which are not considered physically held. NOTE: Sheikhul Islām and Ibnul Qayyim only prohibit the first case while allowing the other three cases. [Ref: A'lam Al-Muwaqq'een (1/388] _ 5⃣. A Widespread Contemporary Application of Debt-for-Debt Transactions An example frequently encountered today is the practice of refinancing or debt restructuring by banks, often advertised on ATMs or other platforms. Banks may offer to "refinance" a person's debts, which, in reality, involves prohibited forms of debt-for-debt transactions. Example: Suppose a person owes £100,000, which is currently due. The bank offers to restructure this debt into a new agreement, increasing the total to £120,000 but deferring the payment. This constitutes selling an immediate debt for a deferred one, which is prohibited. Modern Practices by Islamic Banks A common method involves a bank repaying an individual’s £50,000 debt and then issuing a new loan of £100,000. From this amount, the bank deducts the initial £50,000 and retains a portion (e.g., £10,000) as a service fee. Alternatively, the bank may require the borrower to sign a 'Tawarruq' agreement for £100,000, pay off the existing £50,000 debt, and disburse the remaining balance to the borrower. In reality, the borrower is not receiving a loan of £100,000 but rather two loans of £50,000 each. The first loan repays the prior debt (with interest), effectively selling the original debt for another debt. The second loan is then subject to the new repayment terms. This amounts to prohibited debt-for-debt transactions, which scholars have unanimously ruled against. While banks may employ various tactics to make this practice appear legitimate, it remains a form of financial maneuvering around clear prohibitions. Involvement of a Third Party in Debt Transactions In some cases, a third party may be involved instead of the transaction occurring between two parties directly. For instance, an individual may claim to have settled a debt on your behalf in exchange for a fee. In reality, a significant number of these individuals do not pay even a penny to the creditor. Instead, they rely on connections within the bank to facilitate leniency or allow the debt to be restructured.