Tuesday, 30 June 2015

About Debt (Note Sharing)


Nota dalam buku Islamic studies saya. Saya kongsikan kat sini sebab rasa sangat penting untuk kita semua tahu tentang hutang-berhutang dlm Islam. tak banyak pun sebenarnya & tulisan pun tak formal. Jemput baca =)

Reducing Expenditures

Practically, we should also help ourselves by reducing our spending habits. We may be in debt, but we are still living a high life and a very comfortable life. We have things which we don’t need, but we just enjoy and like them. So we only like and enjoy them, and we don’t like to lose them. But we don’t really need them. So now we have to be patient, and sit and say “It’s time to sell off these things, even though I am attached to them and like them and I”m used to them and comfortable with them. I have debts which I do not want to die with. I have something which I need to take care of. So, I will sell those things and if it takes me to just havin the basics, in order to clear debt, then we have to do it. It is better to be debt free and living with the basics rather than living high with debts.”

And living high with debts is what happens with the credit system here. People are encouraged with credit cards, to put themselves into debt, and put huge limits for themselves. You don’t have the means to cover it, but you will get it. This means that you are living beyond your means. This is what the whole credit card system encourages us to do; it is to living beyond our means. So we pile up a whole bunch of stuff which we don’t need, but we want it. Then something goes wrong like we are sick, or we lose our job or whatever happens, the money which was coming and we were paying off regularly is no longer there. And the debts are now in our face. So should we go around and running, crying, and begging? Or do we look realistically at our situation and say “I have overspent my economic means, and I have to sell it off.” And yes, it may be losses. You will not be getting the price that you paid for the items. This is given. And the most we can do is that we can get some portion of the price back. And no matter how much wealth you have and how much we are losing, like by saying” No, No, I am losing too much, 50% or 40% or 60 % , it is ill gotten wealth once you have debt. It is not ill gotten while you are paying it off until you are longer able to pay it. It is ill gotten wealth until you get rid of it.
Thirdly, this is humiliating. You have to go to the creditors and tell them what your situation is. You can’t be ducking, shying, and not answering telephone calls. So it becomes evil. People have to hunt for you and chase you down and that is an evil position to be in. Go to them and tell them honestly that “This is my situation,” and ask them “Can you give me a break? Give me some more time. And I intend to pay it back.” And, In shaa' Allaah, if we have trust in Allaah, then In shaa' Allaah, He will help us. Whoever fears Allaah and keeps his duty to Him, he will make a way out for him from every difficulty, a way which he didn’t expect. As Allaah says in Sooratu Talaaq, verse 4:
“That is instructed to whoever believes in Allaah and the Last Day. And whoever fears Allaah, He will make for him a way out.”

Imaan of an Individual and Debt
So we should think positively about Allaah. When we are in a debt situation where there is negativity and depression, we have to come out of it by reminding ourselves about who Allaah is. And we should ask, “How is our ibaadah?” The reason is that if we fall into depression, then it will affect our ibaadah because we don’t feel like praying anymore. How could you get to Allaah when all of these things are on your head? All of it will ruin your ibaadah. So to save your ibaadah, you have to wake up and turn to Allaah سبحانه و تعالى who is the One who is capable of helping us through these situations. And we use the duaa's that we spoke about to get Allaah’s help as He promised. In terms of actually taking loans, there are some basics that we should follow.

Debts being recorded

First of all is that the loan should be recorded so that the debt is clear and there are no grey areas. It should be written up with witnesses. As Allaah has told us Sooratul Baqarah 282:“Oh you who have believed, when you deal with each other in transactions which involve future obligations for a fixed period of time, write them down.” No matter how small or big they are, write them down. This saves problems later. And Allaah also says that it should be contracted for a fixed period of time. So the time should be set. It should not be open ended like saying, “pay it back whenever you can.” Sooratul Baqarah 282: 

O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write [it] between you in justice. Let no scribe refuse to write as Allaah has taught him. So let him write and let the one who has the obligation dictate. And let him fear Allaah, his Lord, and not leave anything out of it. But if the one who has the obligation is of limited understanding or weak or unable to dictate himself, then let his guardian dictate in justice. And bring two witnesses from among your men. And if there are not two men [available], then a man and two women from those whom you accept as witnesses, so that if one of the women errs, then the other can remind her. And let not the witnesses refuse when they are called upon. And do not be [too] weary to write it, whether it is small or large, for its [specified] term. That is more just in the sight of Allaah and stronger as evidence and more likely to prevent doubt between you, except when it is an immediate transaction which you conduct among yourselves. For [then] there is no blame upon you if you do not write it. And take witnesses when you conclude a contract. Let no scribe be harmed or any witness. For if you do so, indeed, it is [grave] disobedience in you. And fear Allaah . And Allaah teaches you. And Allaah Knows all things.

This is a very dangerous condition to stipulate pay back as “whenever you can.” You could end up hating people, having said this to them. 'Whenever you can' means the near future. But years can go by and still it is 'whenever you can.' You can end up hating people. You do not want to put yourself in that situation and destroy relationships with people. So put it down in clear terms.

Delaying Repayment
 This relates to the terms of having to set the period of time for repayment of the debt that is owed. Can one who owes debts go for Hajj or Umrah? Can we go use the money to purchase goods which we want, like things which we wanted the money to be used for other than what it was originally meant for? The scholars have said that we have to use the debts absolutely for our basic needs. If we have money which is debt money, you know where we are paying back gradually, and we have to spend, then we only spend for our basic needs. And anything spent above that is not authorized and we should be giving it back. We all know that to go for Hajj or Umrah, we should not have debts. This is the general principle that is being taught. But sometimes one is paying in instalments. You are paying in instalments and the next one is not due until you come back from Hajj or Umrah. Then it is permissible to go even though you have debts. Otherwise, if the money is due and it is Hajj time, and you should go, then you need to get the permissionfrom the person who you owe the money to before you can go. Otherwise, you are using the money which is not yours. You are taking the other people's money and making Hajj with it. This destroys the reward of your Hajj.

We can look at the principles regarding paying debts back, and paying back extra. We know that ribaa is that you borrow $10 but you give back $15. And that is clear. Ribaa is the extra amount on top of $10 which you borrowed. So how is it that Prophet Muhammad gave a man a camel, more than he borrowed. He was given back the camel with extra. Isn’t that ribaa? So what is the difference? The difference is that the extra is not stipulated. And that’s the point. Whereas ribaa is when the lender stipulates that “I am lending you $10 and you must give me back $15.” But where the loan was $10 and nothing was said in the contract that you have to pay extra, but you gave back $15, then you can take it. You are so happy that $10 was given and it enabled you to do so much. You have made huge profit, and succeeded, so it is not burden for yourself. It is like extra profit you have made and you want to give more. You can do it and it is acceptable for you to take it. But on the other side of the coin, is it permissible when it was said that you have to pay by a certain date and you have all the money earlier, but you will delay it for a discounted price. Is this permissible? No, it is not. You owe the money. So what you are trying to imply is like threatening with a sword over his head. You are threatening that you will not pay on time. So this is evil. In other words, you are deliberately planning not to pay the debt, so you are in sin. If you die in sin now, you end up in sin.

So going back to the original hadeeth of the session, one which addresses to large degree our situation here in North America especially in the West, where being in debt is common and most people are in debt. Prophet Muhammad has said, 'The best of you are the best in repaying the debts.' So if you have a haraam debt with interest and you have woken up to Islaam, and you know that debt with interest is haraam, can you just cancel it off and walk away? Or what about the person who converted to Islaam and they have huge debts behind them? And Prophet Muhammad has said that Islaam will erases all the sins before it. So the sins have been erased. So even if you have sins by having debts with interests, it is erased because of your awakening or because it was done prior to your coming to Islaam. However, you have to pay off these debts. It must not be that the Muslim societies are known to the general society that they do not pay their debts and we are known for our evil practices. Instead, what we are supposed to be known for is that we are paying off our debts. And this is what Prophet Muhammad taught us. So in this hadeeth, on one hand, it is pointing out the characteristics of good Muslims whereby they pay off their debts.

Also it calls us to general reflections on the state of indebtedness. With all the hadeeths in which Prophet Muhammad spoke about debts, we should avoid debt like the plague. And we go into debt only if it is absolutely necessary because it is not our way. It is better to live in a rented home free of debt than entering in to a mortgage. Even if the mortgage does not involve obvious interests, it is better to rent in order to avoid debt. If one dies in a state of owing money, and owing money with interest, it will become far worse. And even owing money which is halaal, such as a loan from a friend, it is better not to. If you form some kind of cooperation whereby everybody agrees and puts money in to buy a house for the first one, the second one, this is alright because an agreement is made and people’s rights are covered. If we get the house, it is good Maashaa' Allaah. But we know that we are paying the money in a different situation.

As Muslims we should try to avoid debts as much as possible. And school loans can be a source of debt. This is another big issue that people ask about, saying “Can I take this loan from the government which I have to pay with interest in such and such time.” Well once you have signed that contract of interest, even if you paid it without the interest, you are still in sin. And of course, it is better than to pay it with the interest. But you are still in sin. So what should you do? Work and Study. This is the way to do it. You find a job and if you have the means, then study. If you don’t have the means, do not study, putting yourself into debts. You have so many cases. I was watching a TV program about education some time back. They were talking about study loans, and this is applicable here too. Those who study with loans until they get their PhD, owe about $300,000. It is a huge amount of money where they will not be able to pay it all off , although they have a PhD. When can they pay off these debts with the taxes and interests? So it is not by any means necessary. In Islaam, it is by halaal means only that it is necessary. Haraam means cannot be justified to fulfill our wants. If we have a true or real need, and it is about life or death, then we can look at the circumstances where the person may go into debt to stay alive. Like so that there will be food on the table so that the children can live. Then you may do that because it is for survival. However, even this should be done with the intention of paying it back. Even if you do not have the immediate means, but this is a justifiable situation whereby it is about life or death. For example, when you have encountered loss of life, or wealth, so in order to survive, one may make this decision. Otherwise, it is haraam. So the basic characteristic of Muslims where he or she has debts, is that they will pay it off. But fundamentally, they avoid debt as long it is humanly possible.

Filing Bankruptcy
Filing bankruptcy, as one brother asked about, may occur when one was in a business and it collapsed because of a financial crisis, then the only way out is by filing bankruptcy. Then what is involved in filing bankruptcy? It is where the government or authorities take over the business to sell off your assets and do what they can. Then in the end, they are not able to pay it off and you just walk away. Can you do that? As a Muslim you cannot, although it is legal and the law allows it. There is also the case of taking welfare, where people will take the money and they don’t work; or where we are working in a place that we are not supposed to be working. All of these kind of things are not good. This is where the Islaamic Law says not to do it. And filing bankruptcy does not remove you from debt in front of Allaah. Though legally, in your country, you are debt free. But in the sight of Allaah, you can’t just walk away. And it remains on your shoulders.

Usage of Credit Cards
Another question concerns the arrangement with credit cards whereby you have the bank immediately pay off the purchases for whatever you have charged. They will immediately take money from your account directly. Will that be acceptable? It will not be acceptable because if your money runs out, they will still give you credit. Isn’t it right? Even if you had given the stipulation, they will give you credit. However, for a debit card, it is different. With a debit card, you will have a certain amount of money. So if that money runs out, you cannot do anything with that card anymore and you cannot purchase anything. And this is proper. However, for the credit card, even if the money runs out, you can still purchase. If it is a case where the business requires functioning in the society for a certain capacity, and you need that transaction, you use it for just that. It is because they will not accept other method of payment than that and they will not accept the debit card. And you need that business transaction so you get it and use it just for that. It is not like you can use the credit card anytime. Whenever you are dealing with fundamentally haraam, and you are now excused to deal with it because of your necessity, then you can still only use it to the degree that it is necessary. Once the necessity has been finished, you cannot do anything with it, for anything and everything. And do remember this.

Investing in Shares or Mutual Funds
Is investing in shares or mutual funds allowed? If investing in shares or mutual funds are used to produce halaal products, then it is allowed. However, if it is investing where you are buying or selling shares in the stock market where you can see the people are raising their hands, and they are shouting numbers, or like sell and buy, then no, this is not allowed. This is something else. This is a big gamble. This is another form of gambling whereby legitimately you look at the product and see it and you buy it with shares. Like you see it go down or up, then buy it. So there is a fine line there where you shift it from buying and selling it to gambling illegitimately. So as long as you are on the halaal side, buying and selling, it is no problem. Another question is if are you buying and selling in a company whose capital is interest based and you have gotten into that. Can you buy the shares into the company? Even if the product is halaal, but the capital of the company that you are buying in to is interest based, then it is haraam. So with that we close this session 8,

Purity belongs to You Oh Allaah, with Your praises, I bear witness that there is none worthy of worship except You. I seek forgiveness from You and I repent to You.

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