Can Zakat Be Used to Pay Debts?

The Short Answer

Yes. The Quran explicitly identifies “the debt-ridden” as the Sixth of the Eight Categories of people entitled to Zakat (see Surat Al-Tawbah, 9:60).

What Are Its Stipulations

Legal scholars specify differing conditions that qualify one’s debts for Zakat payment. This leads to variant rulings about who counts as debt-ridden. Yet by any measure, this category of eligibility for debt-relief in Islam remains without parallel in our times or any preceding time.

In brief:

  1. The Hanafis permit Zakat payment of debts for anyone who has debts they cannot meet and whose wealth falls below the threshold for paying Zakat (nisab).
  2. Malikis, Shafi’is, and Hanbalis distinguish one’s Zakat eligibilty for debt payment based on two different causes of one’s debt accrual.
    1. Personal reasons
    2. In the service of communal or civic duties done for the good of society

What Is the Zakat Payment Threshold?

Not all wealth is Zakatable. Different kinds of Zakatable wealth have their own minimum thresholds, called nisab, literally origin,’ or ‘beginning,’ so called because the right of the poor in a Muslim’s Zakatable wealth commences at the point where one’s wealth reaches nisab after a lunar year (hawl) passes on it. Wealth fluctuations above nisab over the course of the year do not matter for the three schools. Fluctuations of Zakatable wealth below nisab, once it is reached, have no impact on the ruling of the Hanafis, as long as nisab is there at the beginning of the Zakat year and on its due date. The Hanafi position on nisab is the relevant one in the case of determining one’s eligibilty for debt payment by Zakat for those following this school of Law because this ruling requires that one’s Zakatable wealth be below nisab.

Here is a table of nisab values on various types of wealth.

Here is a graph that illustrates the Hanafi position on nisab mandating Zakat payment over the course of a year (the dates are arbitrary). Interim fluctuations below the nisab threshold do not effect Zakat’s payment at its due date, ‘W.’ In this graph, ‘C’ marks the point where the other schools would restart counting the Zakat year because one’s wealth has fallen below the Zakat threshold (nisab).

What Personal Reasons Qualify Debt for Zakat Payment?

One whose income has fallen below a level sufficient to sustain his or her living needs and pay off one’s debt accumulated without extravagance qualifies as debt-ridden.

Common, valid reasons for borrowing and debt accrual include:

  1. Essential needs of one’s family
  2. Marrying
  3. Medical bills
  4. Building or buying a home for personal residence
  5. Natural disaster or accident that destroys one’s assets

With regard to calamitous loss, Shaykh Yusuf Qardawi has astutely observed:

Zakat is thus an insurance against the financial effects of catastrophes and accidents, an insurance that predated all known forms of insurance by several hundred years. This insurance is of a higher qualiy and comprehensiveness than modern forms of insurance … that compensate only subscribers with contractual amounts proportionate to the premium paid, which allows the wealthy to insure for higher sums, while the Islamic insurance of Zakat compensates those affected by disaster without requiring them to contribute premiums, and the amount of compensation is determined by the need of the affected person, not by their ability to pay premiums. (Fiqh Al-Zakat, 398)

What Requirements Must the Debt-Ridden Meet for Zakat?

People can receive Zakat to pay off debt if the recipients meet four criteria: (1) need, (2) lawfulness, (3) immediacy, and (4) human agency:

  1. Zakat recipients for debt payment must be in financial need, notably defined not as destitution but as not having wealth sufficient to pay off debts, with two supplements:
    1. time: A person who can pay his or her debts from earnings but over a protracted period still qualifies under this condition.
    2. exempted wealth: Islam exempts from calculation of one’s ability to repay debt the wealth a person uses for living needs — including food, shelter, clothing, furniture, utensils, necessary services, and transportation.
  2. Zakat recipients must have incurred debt from Islamically licit practices. Islam bars helping one to sin, either by way of prohibited activities, like gambling, or through extravagance in lawful accumulations, which the Quran also forbids (see Surat Al-Anfal, 7:31).
  3. Qualified debt due immediately is Zakatable. Some scholars restrict payment to this time condition. Others define immediacy as within a year. Still others do not hold deferred debt payment as an impediment to Zakat. Some set up a sliding scale for Zakat payments to service the debts of the debt-ridden as characterized by these three different legal positions (due immediately, within a year, or deferred beyond this) respectively, according to the amount of Zakat available and relative to fulfillment of the Zakat needs for the other seven categories of the Zakat eligible (see Surat Al-Tawbah, 9:60).
  4. Debt means what is owed to people, not to God (for expiation (kaffarah), for example). Malikis count Zakat as owed to God, Hanafis as owed to people.

The Limits of Zakat for Personal Debt

Zakat should pay off all of one’s qualified debt. If the amount of Zakat given exceeds one’s debt, the excess must be returned into the Zakat coffers.

Debt Incurred in Behalf of a Societal Good

Zakat authorities can pay the debts of someone who incurs it personally in the interest of bringing about a social or communal good, even if that person is rich. These are people to whom individuals or groups turn to for help or problem resolution, or who act in the behalf of the community. Such a person may assume debt that he or she cannot pay in the course of arbitrating conflict settlement or for public projects of communal benefit (building mosques, schools, care facilities, and the like). Nor does the eligible person have to be helping Muslims exclusively, if the non-Muslim parties have a clear relationship that bears on the Muslim community.

Loans from Zakat

Some notable modern scholars analogize borrowers — specifically to keep them from interest, which Islam forbids — to the debt-ridden. They hold that Zakat authorities can give them loans for legitimate needs out of Zakat, in line with Zakat’s objectives.

A Clarification on Debt and the Deaceased

Scholars differ about paying the deceased’s debt from Zakat because he or she can no longer take possession of the Zakat, which some hold as a requirement. Others note that the Zakat verse (Surat Al-Tawbah, 9:60) specifies two kinds of recipients, the directly deserving and beneficiaries on whose behalf Zakat is paid. Debtors fall into the latter class, according to them. Among the scholars that affirm Zakat eligibility for the deceased, some rule that the dead hold first priority among the debt-ridden.

In relation to this, there are reports that some have now taken to reminding at gravesides that the Prophet, on him be peace, did not pray over the deceased if they had unpaid debts. This was true early in the advent of Islam when the Muslims stood persecuted, dispossessed, and without communal standing. When God established His Messenger, on him be peace, and His Community in the land, the Prophet, on him be peace, made clear that he — which means the communal polity after him — would assume responsibility for the debts of the deceased:

“Whoever among my Community takes on a debt then tries hard to pay it off, but dies without having done so, I am his patron (wali),” meaning I am responsible for his debt (Musnad Ahmad, No. 24455).

Similar hadiths (prophetic reports) occur in the two authenticated sources of Bukhari (8:150) and Muslim (No.1619): “I am closer to the believers than their own selves. One who dies owing a debt, I will repay it, while the wealth one leaves behind is for one’s heirs.” The great hadith commentator Al-Hafiz Ibn Hajar said that “this continues to be the case, but the paying of debts is to come now from the public wealth allocated for that purpose.” (Fath Al-Bari, 12:10). 

This is strong support that it is the duty of the Community to use its Zakat to pay the legitimate debts of its eligible deceased.

A Sobering Reminder

Islam counts debt a solemn obligation. The root of its Arabic ‘dayn’ signifies ‘servility’ and ‘humiliation.’ This meaning carries directly over into spiritual significance for one who has wealth to pay debts but hasn’t, or whose heirs can pay them from the deceased’s inheritance but have no specific instructions from the deceased to do so (though the Quran mandates this repeatedly, see Surat Al-Nisa’, 4:11-13). The Prophet, on him be peace, said: “The believer’s soul is detained by his debt until it is paid off on his behalf” (Al-Tirmidhi, No. 1078), meaning it does not enter Paradise until fulfillment of its debt, or its disposition with respect to its debt becomes determined, even the soul of the martyr. Again, this is for those with the means to satisfy their debt in their life; or those who have left no will or instructions for heirs to pay it after them (as an impetus for one’s heirs); or those who in life took loans for extravagant or unlawful things or reasons. In any case, the actions and statements of the Prophet, on him be peace, stand as unnerving reminders to us of debt’s gravity in Islam and as a deterrent to taking debt, except in the case of basic need or benevolent communal service.

As for the genuinely deserving or needful who take lawful loans then die without means to repay them, God will not detain them from Paradise on its account, according to Ibn ‘Abd Al-Barr, the great Portuguese jurist of the Middle Ages. And God alone knows best.

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