Among the people’s rights that Islam guarantees and firmly laid its foundation and principles is paying debts.
As Muslims, we are strongly warned against negligence in paying debts, unnecessarily delaying them or treating them with utter disregard.
The longest verse in the Quran - Aayatu-Dayn – summarises transactions, the rights of the debtor, the approach of the creditor, justice and equity, documentation, witness and evidence.
“O you who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write. Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his Lord, and diminish not anything of what he owes.
But if the debtor is of poor understanding, or weak, or is unable to dictate for himself, then let his guardian dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man and two women, such as you agree for witnesses, so that if one of them (two women) errs, the other can remind her.
And the witnesses should not refuse when they are called (for evidence). You should not become weary to write it (your contract), whether it be small or big, for its fixed term, that is more just with Allah; more solid as evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you carry out on the spot among yourselves, then there is no sin on you if you do not write it down.
But take witnesses whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower of each and everything. (Al-Baqarah 2:282)
Those who fail to pay back their debts are given the sternest of warnings.
The Prophet (peace be upon him) said: “The martyr is forgiven all of his sins…except for his debts.” He adds that: “The soul of a believer is held tied to its debt (after death) until it is paid on his behalf.” These two texts apply to all debts, regardless of whether the person being owed is a Muslim or a non-Muslim.
When debts are not paid, they are rights that become due in the Hereafter. Prophet Muhammad (peace be upon him) said: “Rights will be restored to those entitled to them on the Day of Resurrection, so much so that the sheep without horns will receive its reparations from the horned sheep.”
The rights that people have are upheld for them in the Hereafter and are recompensed through good deeds or bad deeds. This applies generally, even between believers and non-believers. But as Muslims, we are warned against wronging others and making little of our obligations towards them.
As for a person who dies without possessing any wealth but was determined to pay off his debts, his case is different; the mere desire on the part of the dying person to pay off his debts is sufficient for Allah to fulfil the debt on his behalf.
Allah knows best.