How is debt treated when the debtor possesses two different types of assets subject to Zakat?
Chapter on Zakat on Debt and Charity
Al-Mughni
Book of Zakat
Primary text
If one possesses two types of assets subject to Zakat and owes a debt, the debt is assigned against the asset from which it can be repaid first. If the debt is something settled by camels (like compensation or blood money) and one has camels and silver dirhams, the debt is set against the camels, and Zakat on the dirhams becomes obligatory. If the debt involves destruction or usurpation, the value is set against the asset it corresponds to in terms of repayment. If the debt is a loan, there are two views on which asset it is set against, depending on whether assigning it to one asset leaves a remainder that reduces the Nisab of the other asset. In cases where assigning the debt to one asset results in a remainder that reduces the other Nisab, or conversely, the debt is assigned to the asset such that the other asset remains at its Nisab amount, this decision is made to ensure the obligation of Zakat remains, provided there is sufficient wealth outside the necessary Nisab to cover the debt.
Supporting text
When the debt assignment leads to ambiguity regarding the preservation of Nisab in both assets, the debt is assigned to the asset whose corresponding payment leaves a remainder that reduces the Nisab of the other asset, or vice versa, for the benefit of the poor (Al-Masakin). Specifically, if assigning the debt to one asset spares the other asset from having its Nisab reduced, the debt is assigned to the asset that leads to the greater benefit for the poor.