What is the evidentiary standard and procedure when the debtor claims insolvency and the creditor denies it?
General Chapter
Al-Mughni
Book of the Insolvent (Bankruptcy)
Primary text
If the creditor denies the debtor's insolvency, and it is known that the debtor has wealth (e.g., the debt stemmed from a transaction or he has known existing assets), the creditor's word is taken with his oath. If the creditor swears the debtor is wealthy, the debtor is imprisoned until evidence proves his insolvency. If evidence proves the loss of his wealth, their testimony is accepted, whether they possess expert internal knowledge or not, as loss is observable by experts and non-experts alike. If the creditor requests an oath from the debtor regarding this loss, it is not required, as it contradicts the evidence. If the evidence simultaneously testifies to insolvency, the testimony suffices. If the evidence only testifies to the loss, and the creditor requests an oath from the debtor regarding his general insolvency and lack of other wealth, the debtor must swear, as this relates to a matter not covered by the evidence of loss.
Supporting text
If the evidence testifies only to insolvency and not to loss, the testimony is only accepted from those with deep, long-standing internal knowledge, as insolvency is an internal matter typically known only to experts. Al-Shafi'i holds this view. It is narrated from Malik that testimony regarding insolvency is not accepted because it is testimony concerning a negative, similar to testifying that no debt is owed to someone. The counter-argument is that testimony concerning a negative is not absolutely rejected; for instance, testimony that someone is the sole heir of the deceased is accepted. Moreover, insolvency describes a state that becomes apparent and is ascertainable through observation, unlike testifying that someone has no right.