In a terms of language debt (الدين) means the postponement of payment or the obligation to repay something. While in the terms of terminology, debt is the ownership of something that must be returned by the borrower with an equivalent replacement. Based on the understanding, debt is the transfer of ownership of certain goods to another person on the condition that the recipient returns an equivalent amount without any additional increase. Islam does not encourage its followers to incur debt, as it is a burden that affects both parties involved: the debtor and the creditor. Instead, Islam encourages its followers to strive and work independently to resolve economic difficulties.
Beside that, debt is closely related to one’s spending habits and lifestyle. Some desire a luxurious lifestyle to the extent that they are willing to go into debt to obtain what they want, while others are forced to incur debt simply to sustain their livelihood due to economic pressures. Nevertheless, debt must still be repaid, as Islam discourages borrowing in a way that creates hardship for the creditor.
In banking, there is also a type of debt method known as Ar-Rahnu. Ar-Rahnu is an Islamic pawn broking scheme based on Shariah principles. Generally, the term Ar-Rahnu originates from the Arabic word rahn, which means "pledge" or "pawn”. Ar-Rahnu places great importance on a pawn broking practice free from elements of usury (riba) and uncertainty (gharar), as these are prohibited by Shariah law. This pawn broking scheme has been very helpful, especially for lowincome groups to support their livelihood.
However, there are also issues discussed regarding the obligation to repay debt in the context of Ar-Rahnu. Ar-Rahnu accepts collateral such as gold, which is then converted into cash. If someone fails to repay within the stipulated period, Ar-Rahnu has the right to sell the pledged gold to settle the debt. As a result, a concern arises where the debtor needs to pay the debt promptly to avoid the sale of the pledged gold. This causes anxiety for some parties who are unable to repay the debt before the specified period due to several factors, such as low-income debtors who need to prioritize essential items. Therefore, this issue is given serious attention to find measures that can be taken to repay the debt.
Some solutions to prevent debt issues in Ar-Rahnu from becoming more widespread are to use other assets or income to repay the debt. If borrowers face difficulties in repaying the debt in cash, they can use other assets or seek legitimate financial sources to settle the debt. For example, they may sell other items or look for additional income sources to cover the debt costs while also supporting daily necessities. This could include selling a large house to buy a smaller one, with the remaining funds used to settle the debt. Ar-Rahnu allows pledged items (such as gold or jewelry) to be returned once the debt is fully repaid. Therefore, borrowers need to ensure they can repay the debt to retrieve the pledged items given to Ar-Rahnu.
From Abi Hurairah (RA) said, the Prophet Muhammad (SAW) said:
مَنْ أَخَذَ أَمْوَالَ النَّاسِ يُرِيدُ أَدَاءَهَا أَدَّى اللَّهُ عَنْهُ، وَمَنْ أَخَذَ يُرِيدُ إِتْلاَفَهَا أَتْلَفَهُ اللَّهُ
“Whoever takes people’s wealth (incurs debt) with the intention of repaying it, Allah will fulfill it for him. But whoever takes it with the intention of wasting it without repaying, Allah will destroy him.”
Narrated by al-Bukhari (2387)
Another solutions are selling pawned goods to resolve debt. When someone can't repay a debt, in the Ar-Rahnu system within a set timeframe the lender may sell items like gold as a way of settling the debt. The money made from the sale goes towards paying off whats owed and any extra cash is given back to the borrower. This process is meant to prevent interest practices (riba). Lessen financial uncertainties, for everyone involved.
Sayyidatina 'Aishah, she said:
تُوُفِّيَ رَسُولُ اللَّهِ ﷺ وَدِرْعُهُ مَرْهُونَةٌ عِنْدَ يَهُودِيٍّ بِثَلاَثِينَ صَاعًا مِنْ شَعِيرٍ
"The Messenger of Allah SAW passed away while his armor was still pawned to a Jewish person for thirty sa' of barley."
Narrated by al-Bukhari (2916)
Last but not least consulting with the Ar-Rahnu party for settlement refers to the process where the borrower consults with the Ar-Rahnu party to find a solution if they are facing difficulty in repaying the debt. This may include rescheduling payments, discussing alternative solutions such as selling the pawned goods to settle the debt, or finding other alternatives, while ensuring that the transaction adheres to Islamic principles without involving usury (riba).
Allah Subhanahu wa Ta'ala is as follows:
فَإِنَّ مَعَ ٱلْعُسْرِ يُسْرًا {٥} إِنَّ مَعَ ٱلْعُسْرِ يُسْرًۭا {٦}
"For indeed, with hardship comes ease. Indeed, with hardship comes ease."
(Surah Al-Inshirah, verses 5-6)
Therefore, it is important for the debtor to settle any outstanding debts. If the debtor has passed away, it becomes the responsibility of their heirs to pay off any debts that remain unpaid. In Islam, repaying debts is seen as a duty that should be fulfilled with responsibility, fairness, trust, and on time. Islam also offers ways to handle difficult situations, but it requires sincere intention, effort, and action to clear the debt, ensuring that no debts are left unresolved after death.
From Abdullah bin Umar r.a. states that the Messenger of Allah (SAW) said:
وَ مَنْ مَاتَ وَ عَلَيْهِ دَيْنٌ فَلَيْسَ ثَمَّ دِينَارٌ وَلَا دِرْهَمٌ وَلَكِنَّهَا الحَسَنَاتُ وَ السَيِّئَاتُ
"Whoever dies with outstanding debt, then on the Day of Judgment, there will be no dinars or dirhams. What will matter are the matters of good deeds and sins."
(Narrated by Abu Dawood)