Islam, Konwledge & Civilization

A Class Learning Tool
 
HomeSearchRegisterLog in

Share
 

 Debt Management

Go down 
AuthorMessage
izziani.adnan



Posts : 3
Join date : 2010-12-28

Debt Management Empty
PostSubject: Debt Management   Debt Management Icon_minitimeSun Jan 02, 2011 7:05 pm


Assalamualaikum WBT.

Actually, I did not understand at all about what is happening in our world nowadays especially when comes to financial systems. Islam is the way of life and it is very comprehensive in all aspect. However, we as Muslim did not practise it. For example, many people who involved in business did not practiced the etiquette of Islam while doing business. By giving or taking loans/ debt, they tend to give high interest to those who take debt or loan from them. Are they not aware about the punishment of Allah..? Sound very familiar right..? In this post, I want to share to all of you how we can manage our debt properly through revelation which is Quran and Sunnah.

Firmness of The Prophet towards Debt
In hadiths state :
"Every sin is forgiven to the Shahid, except the debt."
[HR Muslim]

The Prophet said, "Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him."
[Narrated Abu Huraira]

"Procrastination (delay) in repaying debts by a wealthy person is injustice."
[Narrated by Al-Bukhari]



FROM BUSINESS PERSPECTIVE

Debt means give ownership or money to others with agreement that person will returns back without any addition. For your information, debt is an alternative for people to run a business.

In Islam, debt is managed accordance to Islamic law. Lending practices are recommended and encouraged. This practice will become mandatory, if it is necessary to save human lives such as people who are need treatment or surgery. Islam promotes people to help each other’s and this is mention in the Quran.

“Help you one another in Al-Birr and At-Taqwa (virtue, righteousness and piety); but do not help one another in sin and transgression. And fear Allah. Verily, Allah is Severe in punishment.”
[Al-Maidah: 2]


Prophet Muhammad SAW said:

“Whoever removes anxiety of a Muslim, Allah will remove his anxiety on The Day of Resurrection”
[Sahih Al-Bukhari Muslim]


However, having debt for nothing is disapproved in Islam because this will burden you and your family when not able to make payment. Loan may able be illegal if it is used for something forbidden and prohibited to Islamic law.


QARD AL-HASAN CONCEPT


Qard al-hasan is a loan, which is returned at the end of the agreed period without any interest or share in the profit or loss of the business. Therefore, Qard al-Hasan is a loan given to the needy people for a fixed period without requiring the payment of interest or share in profit and the receiver is required to repay the original amount of the loan.

Allah says:

If you lend Allah a goodly loan (i.e. spend in Allah's Cause), He will double it for you, and will forgive you. And Allah is Most Ready to appreciate and to reward, Most Forbearing,
[At-Taghabun: 17]


Allah also says about rewards to people who give loan without interest in other surah.

Who is he that will lend to Allah a goodly loan so that He may multiply it to him many times? And it is Allah that decreases or increases (your provisions), and unto Him you shall return.
[al-Baqarah: 245]


Who is he that will lend Allah a goodly loan: then (Allah) will increase it manifold to his credit (in repaying), and he will have (besides) a good reward (i.e. Paradise).
[al-Hadid: 11]


DIVINE RULES REGARDING LOAN

It is extremely important that the loan agreement fulfils the basic principles of contracts in Islam. These principles are as follows:

Both parties should be legally from Shar’a capable to enter into the qardh contract.

Islam obliges (fard) that the parties must fulfil the following requirements. Those entering the agreement must be:

Baligh ( reached the age of puberty )
'aqil ( sane )
rashid ( of sound judgement )

Allah (swt) says,

"Make trial of orphans until they reach the age of marriage; if then you find sound judgement in them, release their property to them." [Al-Nisa : 6].

This ayat states that the age of marriage and sound judgement is the age of maturity, and thereby a mature person is capable to enter into any transaction validly.

The Prophet (saw) said,
"The pen is raised for three groups (of people) that is, they will not be responsible for their actions: the insane until they become sane, those who are sleeping until they are awaken, and the youth until they reach puberty."

The above hadith makes it clear that a person, who has not attained the age of puberty, may not be a responsible party for al-qardh agreement.

Ijab (offer) and qabul (acceptance) of the qardh must be clearly made before entering into the loan contract:

Both parties must be clear about the loan agreement. This is to avoid problems between them in future.
The offer and the acceptance should be state in the contract.


The date of payment should be specified

The date of payment is recommended to be written in the loan agreement. If not, this will lead to ambiguity between two parties in the future.

"Whoever enters into a contract of salam should specify the date of delivery and the amount of subject matter."

The loan contract should be written down.

To avoid disputes in future, it is recommended that both parties agree to write down the loan agreement.
Allah(swt) says,

"O you who believe! When you deal with each other in transactions involving future obligations for a fixed period of time reduce them in writing." [Al-Baqarah : 282]

Getting two witnesses.

It is recommended that both parties agree upon witnesses being present. This will ensure that future disputes are avoided.

Allah(swt) tells us that two male witnesses should be present, if two men are not available, then one man and two women will have the same effect.

"And get two witnesses out of your own men and if there are not two men, then a man and two women." [Al-Baqarah : 282]


SETTLING DEBTS IN A GOOD MANNER

In Islam, it is obligated to settle debts.

Narrated Abu Huraira:

A man came to the Prophet and demanded his debts and used harsh words. The companions of the Prophet wanted to harm him, but the Prophet said, "Leave him, as the creditor (owner of the right) has the right to speak."

It is a burden for creditors to collect money from debtors. However, as creditors, they have right to speak and claims the debt but should be in accordance to the etiquette of Islam. Should not tortured, harassed, bullied and used abusive words to them. Give them enough time to pay their debt.

Narrated Abu Huraira:

"The Prophet, may Allah bless him and grant him peace, owed a man a camel of a certain age and he came to him to ask for it. He said, 'Give it to him.' They looked for one of that age, but only found one older. He said, 'Give it to him.' He said, 'You have given me full payment. May Allah give you full payment!' The Prophet, may Allah bless him and grant him peace, said, 'The best of you is he who is most generous in settlement.'"

Prophet Muhammad SAW encourages debtors to pay back their loan with better ways to show their appreciation towards those who give help to them. The Creditor is forbidden to ask for anything extra from his loan, as this is clearly Riba (interest). However it is perfectly acceptable for the Debtor to give something more than they received.


PRACTICES TO AVOID THE BURDEN OF DEBT

Prophet Muhammad SAW prays:

O Allah! I seek refuge in You from unbelief and poverty, and from the punishment of the grave. There is no deity except You.
[Narrated by An-Nasai’e, Al-Hakim and Az-zahabi]

O Allah! I seek refuge in You from worry and sorrow. I seek refuge in You from impotence and sloth, from stinginess and cowardice, and I seek refuge in You from the burden of debt and from being humbled by men
.


Narrated from Umm al-Mu’mineen ‘Aa’ishah (may Allah be pleased with her), the wife of the Prophet (peace and blessings of Allah be upon him), who said that the Messenger of Allah (peace and blessings of Allah be upon him) used to pray in his salaah:

O Allah, I seek refuge with You from the torment of the grave, I seek refuge with You from the fitnah of the Dajjaal, and I seek refuge with You from the trials of life and death. O Allah, I seek refuge with You from sin and debt.

Lets us practice together.
“Bitaufiq Wannajah” !!!!

References:

Mohamed Sulaiman Ph.D, Aizuddinur Zakaria, jejak bisnes rasul, peribadi bisnes Muhammad bin Abdullah, 1st edition, PTS Professional; 2010
http://www.searchtruth.com/chapter_display.php?chapter=5&translator=5&mac
http://www.sunnipath.com/library/Hadith/H0002P0046.aspx
http://www.witness-pioneer.org/vil/Articles/shariah/al_qard_al_hasan_A_Practical_Approach.htm
http://www.universal-islam.com/articles/article.php?id=24

By: Nur Izziani Bt Mohd Adnan (0933900)
p/s: sorry for my bad English..
Smile


Last edited by izziani.adnan on Sat Jan 08, 2011 1:41 am; edited 4 times in total
Back to top Go down
wanSabiha



Posts : 12
Join date : 2010-12-26

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeTue Jan 04, 2011 12:33 am

asslamualaikum.. what an interesting info. basically i want to add up something regarding to debt. instead of having two witness when the transaction is been done. the debtors and creditors themselves should take a note and keep it to be the prove so that when something comes up and there is doubt, they can refer it back to the prove. Rasulullah once said that, we should keep a note on every debts that we take or give.
nowadays, we can see that all banks are using conventional system. so whenever we make a loan, for sure we have to pay the interest. In Islam receiving and giving interest is completely forbidden because concept of interest is same like riba which is generate something from nothing. as we know, the value of the money is not the same from year to year because of its price index. RM 10000 ten years back is not the same like RM 10000 today. so if someone in debt with us ten years back and just return it in fully and exact amount that he/she borrowed, it might be not enough as the value of the money itself have decreased. so if he/she borrowed RM100 ten years back, at that time RM100 is a big amount, but today, RM 100 is just like RM10 ten years ago. in conventional economics, because of the value of money change, we have to add up extra money when we want to pay the debt in order to compensate the creditors. if we think logically, it might be true. but remember in Islam, interest are strictly forbidden, this is because, if Islam practice interest it will burden people who are in debt to pay up their debt. because their debt is increasing not decreasing at all. that is why, Islam forbid a Muslim from charging interest.
there is also Islamic banking nowadays, but what i'm wondering right now, although they are using Islamic finance in the transaction, why upon a certain point, we still can see the conventional banking there.
Back to top Go down
0936052



Posts : 5
Join date : 2010-12-28

Debt Management Empty
PostSubject: 0936052   Debt Management Icon_minitimeTue Jan 04, 2011 1:11 pm

Assalamualaikum.. miss biha n yan, tq for your beneficial info.. actually, i had some doubts about our financial loan because most of them seem to have interest charges.. i would like to ask your opinion about PTPTN.. does it permissible or not..? because as we all know, we have to pay it back more than what we have owed.. does it included as interest or not? anyone who has an idea about this, please feel free to share your opinion~
Back to top Go down
izziani.adnan



Posts : 3
Join date : 2010-12-28

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeWed Jan 05, 2011 1:33 am

Assalamualaikum WBT..

Dear Sabiha. Thank you for sharing your information. It is importance to write and keep a note in every debt/loan in case something bad happened to the debtor or creditor. In future, the debtor or creditor might have serious illness that may caused their memory becomes weak, or death and this will create big problems especially if the amount of debt/loan is big/high. Therefore, by using notes, the creditor can claims back their money from debtor’s family.

I am agreeing with you about our banking system nowadays. It is true that conventional banking has no difference at all if compared to Islamic banking. Interest becomes common in this business world although it had clearly stated in Quran and hadith that Allah and Prophet Muhammad SAW strictly prohibit us to take or give interest. Rasulullah SAW once said, an individual who give and take interest (riba) is the same. In a book titled ‘Peribadi Bisnes Muhammad Bin Abdullah’ it is written that the best way to manage the interest from conventional bank is by donate (sadaqah) the money without hope of reward (pahala). Actually, this book provides hadiths about this but I cannot find the translation because this book is in Bahasa Malaysia.

“sesiapa yang mengumpulkan wang haram dan kemudian bersedekah dengannya (membuat kebajikan) maka tiadalah sebarang ganjaran kebaikan untuknya”
[Narrated by
Hakim]

In one incident, Saidina Abu Bakar had one bet to prove that the Prophet Muhammad SAW’s words about Islamic victory over Rome are true. After islam beat Rome, Saidina Abu bakar got his prize from the bet. Prophet Muhammad SAW ordered Saidina Abu Bakar to donate (sadaqah) it, because the money is dirty (comes from gambling result). Abu Daud and Al-Baihaqi narrate this hadith.

“Bitaufiq Wannajah”!!!!
Nur Izziani Bt.Mohd Adnan (0933900)


Back to top Go down
izziani.adnan



Posts : 3
Join date : 2010-12-28

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeThu Jan 06, 2011 8:15 pm

Assalamualaikum WBT.

Dear Sabiha. Regarding Islamic banking and conventional banking, I found something interesting about this in the internet. You are encouraged to visit this web site. http://www.zaharuddin.net/hal-ehwal-riba/301-riba-dalam-bentuk-semasa-di-bank-konvensional.html

Based on article, i found the differences between Islamic banking system and conventional banking system and I changed my perception towards Islamic banking system after read it.

In conventional banking system, interest will be charged towards people who make loan such as car loan, home loan, term loan or overdraft, hire purchase loan and personal loan. For example when Ahmad make loan in bank A ( RM 50000), interest is charged at 5% from the total amount that he borrowed. 5% charged (RM 2500) is actually Riba Ad-duyun. The total interest plus the principal amount of the loan will be subdivided by month. The amount of RM2500, which is revenue to the bank, is HARAM according Islam. To those who make loan and cannot afford to pay the loan, these conventional banks will stress them to pay the penalty. This kind of penalty is same like compounding. This is strictly prohibited by Allah and Prophet Muhammad SAW because it is gained from the distress of needy people. It is looked like has becomes common to the society.

Islamic banking system: When people who make loan does not afford to pay back their loan within a specific time, they will charge fines or costs or loss (ta'widh or compensation').

Delayed payment of the fine imposed by the Islamic Bank is on the instalment sale basis, while the penalty is the result of Conventional Banks loan contract. If the customer does not pay their instalment payment within a specific time, ta’wid or compensation is charged. The bank does not transfer the ta’wid or compensation into their income account but the money is distributed to the needy person (fakir) for benefaction. This is being practices by many Islamic banks in Malaysia as Asian Finance Bank Berhad, Kuwait Finance House, Ar-Rajhi Bank and RHB Islamic Bank Berhad.
From this, I learned that Islamic banking system is not same as conventional banking system. This is my summary from reading the article. If you want to know more, please visit the web sites. Thank you.

Dear 0936052, regarding to PTPTN loan, I also in doubt about this. In Islam, interest (riba) is strictly prohibited by Allah and Prophet Muhammad SAW as stated in my previous post.

In my opinion, there are several ways that we can try before deciding to make PTPTN loan as sources of income to continue study. Firstly,students have to try their best to requesting scholarship. For example, JPA, SHELL, KHAZANAH, BANK NEGARA, and etc. Try their best to achieve good CGPA in their studies. It is hard to get scholarship or zakat nowadays, but this is one of the ways for us to avoid being involved in interest (riba) that charged by PTPTN or others loan.

If it is true that PTPTN will be providing opportunities for us to avoid the payment of the loan if only we get first class degree, we have to struggle to achieve that. As for me, it is MUST for students to achieve that in order to avoid themselves from sin of riba. InsyaAllah..

I found this articles and you are encourage to read it. http://www.zaharuddin.net/hal-ehwal-riba/531-ptptn-hukum-a-kos-perkhidmatan.html
Thank you

“Bitaufiq Wannajah”!!!!
Nur Izziani Bt.Mohd Adnan (0933900)



Back to top Go down
1016179



Posts : 9
Join date : 2010-12-31

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeWed Jan 12, 2011 12:43 am

Salam,

The zaharuddin.net post was really interesting.Thanks for that izziani.I would just like to add something,the scholarship that we apply for is it of halal source?did this companies earn the revenue from halal sources?
Back to top Go down
wanSabiha



Posts : 12
Join date : 2010-12-26

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeThu Jan 13, 2011 4:53 pm

dear izziani, tanx for the reply. my point of view, theoretically, Islamic Banking suppose to act like that. what i'm concern right now is Why certain Islamic Banking right now are using the mask as Islamic Banking while they are using conventional system? this is because, the person who are in charge in operating the banking system is not the person who are really understand about the Islamic Banking itself. btw, tanx for the good info.. help me a lot.
Back to top Go down
wanSabiha



Posts : 12
Join date : 2010-12-26

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeThu Jan 13, 2011 5:07 pm

dear 1016179,
regarding to that matter, if the company is clearly we know that they generate the revenue from haram trading or activities, obviously we should not apply for it. but to question whether the scholarship that apply is from the halal source or not is same like the situation that we are questioning whether the payment that the government workers get are from halal source or not. As we know, part of our government income is from gamble taxes, and this income will be combined with other sources of income to be distributed to the government workers.so do you think the payment is halal? logically it is not, but, what we can do about that. if we are thinking about that, we cannot live in this country and also we cant even earn the salary to continue living. What we concern here is the way we get salary. is that from the halal way or not. same goes to the scholarship, if it is clearly that it is from haram sources, then we should reject it and if there is nothing doubtful about that so just carry on. and one more thing, about the government workers' salary, we didnt really know is that the portion of the gambling taxes is included to pay the salary or not. so as long as it is through halal way, so there should not be any doubtful about the scholarship..
p/s> sorry if there is anything wrong statement regarding to this reply. do correct me if happen to be i'm the one who understand wrongly. =)
Back to top Go down
1019367



Posts : 8
Join date : 2010-12-30

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeSat Jan 15, 2011 1:24 am

dear izziani..
thankz for your post about http://www.zaharuddin.net/ link. It’s really a lot of info inside there especially relating our current financial assistance in university. It is very useful for me to define them.
For wanSabiha, I do agree with your opinion about present Islamic banking. What I see nowadays, there is a lot of diversion in term of Islamic banking style. Supposedly, it must based on Islamic shariah, but it goes another ways around. Besides the people who are in charge are not the people who are really understand about the Islamic Banking itself, it is because they try to confuse and deceive Muslims. By doing so, a lot of Muslim will support their business hence, make them as the profitable company. They really do not care about halal and haram, but their main goal is to achieve worldly pleasure even they knew it is sinful. One more, I think, it is really hard for someone to begin to develop a pure Islamic economic system. This happens as all people around us presently are not care about doing business in Islamic way, plus, not refer from both main sources ( al-Quran & Sunnah ) anymore. In their minds, doing business through Islamic path just a waste of time, because they do no want to bear any losses, just do thinking about their own self-interests, and want to get a quick profit. There is nothing in their thoughts about social welfare, resources from Allah and the duty as a trustee of Allah’s bounty. So, I feel it is too hard for economic students to survive in future if he/she decides to walk through the right path, the path that oppose with most people now.

salam
lol!
Back to top Go down
wanSabiha



Posts : 12
Join date : 2010-12-26

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeFri Jan 21, 2011 2:55 pm

dear 1019367~ yes i agree with you that it is hard to develop pure Islamic Economics as we didn't get support from the highest authorities of our country. that is why, it is hard for us to implement the Islamic Economics. This remind me about what my foundation of Islamic Economics lecturer said, right now, all Muslims economics scholar are trying to finished up the text book of Islamic Economics so that the students can easily get reference about Islamic Economics for more details, this shown that we are moving towards Islamizing our Economics through giving basic education to the students with full details. it is our responsibility to correct the system that are used right now, my lecturer said that if we cant change all the system, at least make a change to the system, if everyone make change to the systems, lastly, the system will change towards Islamic system. it is like doing bit by bit and then it will accumulated and will give a great result. actually, when the person are using Islamic ways in doing business, they will get more profit rather than using conventional one but it takes time and it really need to follow the rules of shariah, because Allah will not make a rule that will not give benefits to His creatures. why they didn't want to follow shariah as, they didn't have enough patient to wait for the benefit, they eager to be rich on the spot. this people is corrupted by the mind set of conventional system where, people will demand more and more and there is no satisfaction in their dictionary.. Very Happy
Back to top Go down
0936052



Posts : 5
Join date : 2010-12-28

Debt Management Empty
PostSubject: 0936052   Debt Management Icon_minitimeTue Feb 08, 2011 1:05 pm

sorry to interrupt.. but i want to ask ur opinion about spending money from scholarship to something that are not related to study.. in my understanding, scholarship is given by the government to a qualified person in order to pursue study.. this money also come from people in that country through taxes.. so, they can use the money to buy books, foods, pay fees and many more that can support their study.. in this case for me, it is allowed as long as they didn't use it for a waste.. however, there is a few student who used this money to buy an expensive hp or pay deposit for their car/motorbike... so, what is the rules to this case? is it allowed because the money is give to that person..? so, they have the right to allocated this money according to their will.. or is it prohibited because they are using money that is given by society for studying to buy unimportant things? please feel free to share ur opinion.. n do correct me if i'm wrong.. especially due to the source of scholarship.. sharing is caring~ Wink
Back to top Go down
wanSabiha



Posts : 12
Join date : 2010-12-26

Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitimeWed Mar 02, 2011 3:02 pm

dear 0936052,
regarding to your question. Based on my opinion, that person to use the money according to his or her will if and only if she or he already fulfill the needs in his or her study. but obviously not in the wasteful manner because no matter from where a person get the money whether from parents or scholarship even the loan, a person cannot use his or her money wastefully as it is contradict with Islamic principle . in scholarship agreement, it already stated that how much will go to the books, fees, stationery and daily expenses. if they already paid the fees, books and buy the stationery and it will left behind the daily expenses. so, may be the portion that they use to buy the HF is come from the daily expenses. so it will not affect the portion that should go to the study matter. you are the one who decide how the left portion for the daily expenses is going to be expense. if you wanna but an expensive things, that means you should reduce in buying the food. if you spend the money economically, that means you have some other portion to be saved, then you can use this money for what ever reason you want as long as you fulfill the basic needs in study first. this is my opinion, do correct me if i'm mistaken Very Happy
Back to top Go down
Sponsored content




Debt Management Empty
PostSubject: Re: Debt Management   Debt Management Icon_minitime

Back to top Go down
 
Debt Management
Back to top 
Page 1 of 1

Permissions in this forum:You cannot reply to topics in this forum
Islam, Konwledge & Civilization :: Welcome to ungs 2040 forum :: My Class Work :: Revelation & Sciences-
Jump to: