What is the procedure when a debtor, liable for an immediate debt, is confronted but fails to pay, and claims insolvency?
General Chapter
Al-Mughni
Book of the Insolvent (Bankruptcy)
Primary text
If a debtor is confronted over an immediate debt and does not pay, the judge investigates. If he has apparent wealth, he is ordered to pay. If he claims the wealth belongs to another, the previous ruling applies. If no apparent wealth is found and he claims insolvency, and his creditor confirms it, he is not imprisoned, and respite is mandatory; pursuit is not permitted. This is due to the verse: {And if someone is in difficulty, then let there be a delay until a time of ease} (Quran 2:280), and the Hadith regarding the debtor whose debt became large: 'Take what you find, and you will have nothing but that.' Imprisonment serves either to establish insolvency or to facilitate payment; since insolvency is established and payment is impossible, imprisonment is useless.
Supporting text
If the creditor denies the insolvency, and it is known that the debtor possesses wealth, either because the debt arose from a transaction like a loan or sale, or if he has existing wealth apart from this debt, the creditor's word is taken along with his oath. If the creditor swears he is wealthy, the debtor is imprisoned until evidence proves his insolvency. Ibn al-Mundhir stated that the majority of scholars and judges he records hold that imprisonment for debt is permissible, including Malik, Al-Shafi'i, Abu Ubayd, Al-Nu'man, Suwar, and 'Ubayd Allah ibn al-Hasan, with a narration from Shurayh and Al-Sha'bi. 'Umar ibn 'Abd al-'Aziz used to say his wealth should be divided among creditors, and he should not be imprisoned. This latter view is held by 'Abd Allah ibn Ja'far and Al-Layth ibn Sa'd.