Seeking Debt Counselling

السلام عليكم ورحمة الله وبركاته

With regards to your query regarding the permissibility of seeking debt counselling, please be advised:

Our understanding of the process of debt counselling and the debt rearrangement options is:

1. The debtor begins by applying for a review with a debt counsellor to assess whether they are over-indebted.

2. Once the debt counsellor completes the assessment and confirms the over-indebtedness, a certificate of over-indebtedness is issued.

3. With this certificate, the debtor becomes eligible to apply for debt restructuring, and a debt counsellor is formally engaged to oversee the process.

4. Debt restructuring or rearrangement may include one or more of the following:

4.1. Consolidation loan — The counsellor refers the client to one of their partner institutions, and the client takes out a new loan to settle multiple existing debts.

4.2. Claim of reckless credit — Submitting a claim to the magistrate if credit was granted irresponsibly.

4.3. Extension of the repayment period — Resulting in a reduction in the amount of each instalment.

4.4. Postponement — Temporarily suspending payments for a defined period.

4.5. Combined extension and postponement — Extending the term while also delaying instalments.

4.6. Recalculation of obligations — Adjusting the consumer’s payment obligations due to contraventions of the National Credit Act (NCA).

Based on the above understanding, our guidance is as follows:

1. As a general reminder and sincere encouragement, engaging in interest (ribā) is among the most serious offences a person can commit against his Lord, Allah the Most High. The one who engages in interest is cursed by Allah, deprived of blessings in his wealth, and will be resurrected on the Day of Judgement like one driven to madness.

2. Our discussions below should not be seen as a sanction to engage in interest. Rather, it simply discusses the options available to one who already finds himself entangled in this worrying situation.

3. Thereafter, in principle, seeking counsel and guidance from a debt counsellor is permissible.

4. After the debt counsellor assesses one’s financial situation, the permissibility of accepting assistance from the counsellor depends on the type of debt rearrangement option proposed.

5. If the debt counsellor offers a Sharīʿah-compliant solution, then he is entitled to the fee he charges. However, if he proposes an impermissible solution, then he is not entitled to the fee, as the service rendered involves facilitating a prohibited transaction.

6. The debt rearrangement options mentioned earlier are not all Sharīʿah-compliant, and each must be examined individually. Below is a brief evaluation of each option:

6.1. Consolidation Loan — An interest-bearing consolidation loan:

6.1.1. If the new loan carries a higher or equal interest rate than the original, it is undoubtedly impermissible.

6.1.2. If the new loan carries a lower interest rate, one may argue that it is permissible, as it ultimately would result in one paying less interest.

6.2. Claim of Reckless Credit — If the debt counsellor can argue before a magistrate that the creditor acted recklessly in issuing the loan, resulting in a reduction or cancellation of interest, then this is permissible and encouraged.

6.2.1. If the interest component is removed or reduced, the debtor benefits from exiting the ribā-based portion.

6.2.2. However, if the debt is cancelled beyond the principal loan, then, from an Islamic perspective, the debtor remains liable to repay the principal amount to the creditor, as this is a rightful claim.

6.3. Extension of the Repayment Period — If extending the repayment period does not result in increased interest, then this is permissible.

6.4. Postponement of Payment — Temporarily suspending payments for a defined period is permissible and encouraged, provided that the creditor consents and no additional interest is charged during the postponement.

6.5. Combined Extension and Postponement — This option is also permissible under the same provisions as option 6.4.

6.6. Recalculation of Obligations — If the National Credit Act (NCA) finds that the creditor acted negligently or in contravention of the law and subsequently reduces the debt by eliminating interest, this is permissible. However, if the recalculated debt drops below the original principal loan, then, according to Islamic law, the debtor would still be required to repay the full principal amount, as it remains a legitimate debt owed to the creditor.

والله تعالى أعلم

And Allah knows best

النصوص المستندة اليها

١) صحة جعالة المستشير

قال م ر في النهاية

وأفتى المصنف فيمن حبس ظلما فبذل مالا لمن يتكلم في خلاصه بجاهه أو غيره بأنها جعالة مباحة وأخذ عوضها حلال ونقله عن جماعة: أي وفي ذلك كلفة تقابل بأجرة عرفا انتهى

٢) صحة اقتراض المفلس

قال حج في التحفة كتاب التفليس: فلو تصرف في ذمته كأن باع في ذمته غير سلم أو سلما أو اشترى أو استأجر أو اقترض شيئا في الذمة فالصحيح صحته انتهى

٣) فساد الإقراض بشرط الزيادة

قال شيخ الإسلام في شرح المنهج باب القرض:

وفسد أي الإقراض بشرط جر نفعا للمقرض كرد زيادة في القدر أو الصفة كرد صحيح عن مكسر انتهى

٤) حفظ باقي المال من الظالم بذل بعضه

قال في التحفة كتاب الديات:

أنه لو خاف ظالما على ماله جاز له بذل ما يندفع به عنه دون حالة الوجوب فلا فرق فيها بين مال المحجور وغيره انتهى

٥) جواز تعاطي المعاملة الفاسدة عند الضرورة، أو ارتكاب أخف الضررين

قال في التحفة باب البيوع المنهي عنها:

وقد يجوز لاضطرار تعاطيه كأن امتنع ذو طعام من بيعه منه إلا بأكثر من قيمته فله الاحتيال بأخذه منه ببيع فاسد حتى لا يلزمه إلا المثل أو القيمة انتهى

قال عبد الحميد:

وقد يجوز إلخ صادق بما إذا أدت الضرورة إلى الربا كامتناع موسر من إقراض مضطر فليحرر اهـ بصري ومر عن ع ش الجزم بذلك وكذا عبارة المغني وهي وتعاطي العقود الفاسدة حرام في الربوي وغيره إلا في مسألة المضطر المعروفة وهي فيما إذا لم يبعه مالك الطعام إلخ اهـ صريحة في الشمول انتهى