Answered by Mufti Yusuf Mullan
We were owed some money (a large sum) but these relatives that owe us the money are finding it difficult to pay and we have told them we do not want this money and we forgave them the debt, however they have always maintained that they will pay us. Realistically looking at it, it seems they will not be able to pay as they are not in an excellent financial position and are also in the process committing to another financial debt. They are purchasing a house from the council for a cheap amount and will be taking out a halal mortgage. However NOW, (approx a year after we forgave them) they mentioned in a conversation that they will pay us but no timescale has been put on this. I would obviously like this money to be paid but realistically we (I and other family members) feel that we will not get this money, however they say they will pay.
Wa alaikum salaam,
According to the relied upon opinion in the Hanafi school, apparent inability of the borrower to pay off the debt, such as in the case of genuine bankruptcy, does not carry any legal consequences, as far as Zakat accumulation of the lender is concerned. Upon receiving the debt, the lender will need to backdate the Zakat payments to account for all the previous years. Given this, presently, you are not liable to pay Zakat on this money your relatives owe you. If at some later date, however, they pay you, at that time you will need to backdate the Zakat to cover all the previous years. [al-Bahr al-Ra’iq]
And Allah knows best.
Yusuf