In Islām, while recognising that there are legitimate circumstances for taking out loans, and while regulating the rules around giving loans and replaying loans, being in debt is very strongly discouraged
Bukhārī and Muslim record that one of the duʿās the Prophet (SAW) used to make at the end of every salāh was seeking refuge in Allāh from heavy debt. Someone asked him, ‘How often you seek refuge from heavy debt!’ He remarked, “When a man gets into debt, he speak and tells lies, and he makes a promise and breaks it.”
Nasāʾī records that once the Companions were sitting with Allāh’s Messenger (SAW) when he raised his head towards the sky, then he put his palm on his forehead and said, “SubḥānAllāh! What a strict issue has been revealed to me!” We remained silent and were afraid. The following morning, I asked him, ‘Messenger of Allāh, what is this strict issue that has been revealed?’ He replied, “By the One in whose hand is my soul, if a man were killed in battle for the sake of Allāh, then brought back to life, then killed and brought back to life again, then killed, and he owed a debt, he would not enter Paradise until his debt was paid off!”
The martyr has an immense status in Islām, yet even for one such as he, the ultimate reward is deferred until his debt is resolved!
ʿAbdu’l-Razzāq records that ibn ʿUmar said, ‘Fear Allāh and do not die in debt, lest it be taken from your good deeds on a Day when there will be no dīnārs and no dirhams.’
Imām Qurtubī made the following statement about debts, ‘Our scholars said that debt is referred to as a disgrace and a humiliation because it preoccupies the mind and makes one worried about paying it off. It makes one feel humiliated when meeting the lender, and feeling that he is doing him a huge favour when accepting a delay in payment. Perhaps he may promise himself that he will pay it off then break that promise, or speak to the lender and lie to him, or swear an oath to him then break it, and so on. Moreover, he may die without having paid off the debt so he will be held hostage because of it, as the Prophet (SAW) said, “The soul of the believer is held hostage by his debt in his grave until it is paid off.” (Tirmidhī) All of that undermines one’s religious commitment.’
A person in debt is like a prisoner, as the Prophet (SAW) said, “Your companion (who has passed away) is being detained by his debt.” (Abū Dawūd)
Indeed, the Prophet (SAW) – in the beginning of Islām when unable to pay a person’s debt himself – would not pray the funeral prayer for a person in debt until his debt had been paid off! One time, the Prophet (SAW) refrained from praying the funeral of a person who had a debt of two dīnārs and only prayed it when one of the Companions pledged to cover that debt, remarking, “Now his skin has become cool for him.” (Aḥmad)
The main lesson we learn here is that Islām has discouraged debt as much as possible, and that debt is something that has a serious and direct impact on one’s faith and Hereafter. Muslims must be extremely cautious when it comes to the issue of going into debt, we must realise how serious this is in Allāh’s sight. We must do all we can to avoid being in debt, or if we are in debt, do all we can to release its shackles as quickly as possible.
We must learn to manage our finances to the best of our abilities.
Islam also recognises that people do go into debt for a plethora of reasons, many outside their direct control. Here, the community comes into play, and as Muslims, it is also strongly recommended for us to support a person in debt. Allāh’s Messenger (SAW) said, “Whoever relieves a Muslim of distress, Allah will relieve him of distress on the Day of Resurrection.” (Bukhārī & Muslim) Indeed people in debt, who cannot repay it, are deserving of help to clear their debts from Zakāh itself, thereby stressing to us how much Islām wants Muslims to be free of debt.
The person who gave a loan, should be, wherever possible, understanding of the circumstances of the loanee and be willing to give him more time. Allāh’s Messenger (SAW) said, ““Whoever gives respite to one in difficulty, he will have (the reward of) an act of charity for each day. Whoever gives him respite after payment becomes due, will have (the reward of) an act of charity equal to (the amount of the loan) for each day.” (Ibn Mājah)
Finally, always remember that Allāh is al-Razzāq (the Ultimate Provider) – He is always there for His sincere servant, put your trust in Him, rely on Him and He will provide us a way out for all our difficulties. “And whoever fears Allāh, He will make for him a way out and will provide for him from where he does not expect. And whoever relies upon Allāh, then He is sufficient for him” (Q65:2-3)
Bukhārī records that Allāh’s Messenger (SAW) said, “The one who takes people’s wealth intending to pay it back, Allāh will pay it back for him, and the one who takes it intending to destroy it, Allāh will destroy him.”
Do your best, and make duʿa (supplication) to your Lord, Most High.
One time, the Messenger of Allāh (SAW) entered the Mosque and saw an Anṣārī man whose name was Abū Umāmah. He asked, “Abū Umāmah, why do I see you sitting in the Mosque when it is not the time for prayer?” He replied, ‘Worries and debts!’ He said, “Should I not teach you some words which, if you say them, Allāh will take away your worries and pay off your debts?” He said, ‘Yes!’ He (SAW) then said, “Say, morning and evening
Allāhumma innī aʿūdhu bika min al-hammi wa’l-ḥazani, wa aʿūdhu bika min al-ʿajzi wa’l-kasli, wa aʿūdhu bika min al-jubni wa’l-bukhli, wa aʿūdhu bika min ghalabati’l-dayn wa qahri’l-rijāl
Allāh, I seek refuge with You from worry and grief, and I seek refuge with You from incapacity and laziness, and I seek refuge with You from cowardice and miserliness, and I seek refuge with You from being heavily in debt and from being overcome by men.”
Abū Umāmah said, ‘I did that, and Allāh took away my worry and paid off my debt.’ (Abū Dāwūd)
Note: WISE are also running a course on Money Managements, the details of which can be seen here