Does the ruler have the authority to forcibly sell the property of a bankrupt person against his will?
General Chapter
Al-Mughni
Book of the Insolvent (Bankruptcy)
Primary text
When the creditors petition for sequestration and the debtor is unable to pay, the ruler must respond to the petition. The ruler has the authority to forcibly sell the bankrupt's property to settle the debt, based on the report (Hadith) that the Prophet (peace be upon him) sequestered Mu'adh and sold his property for his debt, and the report concerning the sequestration and sale of the property of Asif'a al-Juhani by Umar ibn al-Khattab (may Allah be pleased with him). The justification is that the debtor is under sequestration and required to pay his debt, thus his property may be sold without his consent, similar to a minor or a mentally unfit person. Furthermore, property can be sold to discharge a debt, similar to how currency can be exchanged.
Supporting text
Abu Hanifa holds that the ruler does not have the authority to seize the property unless he has exercised his independent judgment (Ijtihad) favoring sequestration. Even then, the ruler can only compel the debtor to sell if necessary for repayment; if the debtor refuses, the ruler cannot sell it himself. This view also applies to a solvent debtor refusing to pay; the ruler can only imprison him to compel a sale by the debtor himself, unless the debt is in one currency type (e.g., Dirham) and the asset is in the other (e.g., Dinar), in which case an exchange is permitted because the debtor is competent (rasheed) and not under sequestration. The two companions of Abu Hanifa disagree with him on this last point.