Bankruptcy, business dispute : bankruptcy

السؤال

[Question One] : Dear Professor Monzer : Salam Alaykum. I have a question for you regarding bankruptcy. I have read a few of your replies to similar questions, but I think my situation is unique and warrants special consideration. Please correct me if I am wrong or if I have missed any of your previous Fatwas on the matter. From my readings of your previous replies, you seem to set the "ability to repay" as the criterion for bankruptcy being Halal or Haram. Also, you seem to make no distinction between secured and unsecured debts / loans. I am sure that you know better than I the difference between these two types of debts / loans. My situation is as follows. I live in the USA. In the spring of 2008, I started trading in stocks as an alternative to putting my money in a Savings account and receiving interest on it. Unfortunately, through the summer of 2008, the stock market declined sharply, which led me to increase my investment in stocks as well as trade on margin (my broker's money) to attempt to recover from significant losses, until the market ultimately crashed in the fall of 2008 and I lost virtually all my savings as well as a large amount of my broker's money. I was left with demands for immediate repayment from my broker and I had no money to repay. At the same time, I was receiving offers from my credit cards for cash advances (unsecured loans / no collateral) for a promotional period of 6 months at very little to 0 % interest rates. I decided to accept two of these offers and took cash advances from my credit cards to repay my broker, planning to pay back those loans from my salary and as the market recovered within the promotional period, without having to pay the very large interests afterward. Unfortunately, things did not go as planned. I was a double casualty of the economic crisis : I lost my job two months later and the market did not recover. The promotional period for the cash advances ended in the spring of 2009 and I was left with large interests to pay. I had no other option but to keep making the required minimum payment to those credit cards every month, sometimes using loans from family members. Now, I cannot make any more payments or ask for any more loans from family. However, I am not totally broke, I have a small piece of land back home that I had bought in installments and hoped to build a house upon, to start a life. My question is as follows. Would it be Halal for me to declare bankruptcy in the USA and just wrap everything up and go home ? I have not been able to find a job in this country for more than a year in spite of my education and experience. US lawyers tell me that I can just flee the country and not pay anything back because a civil judgment in favor of those credit card companies cannot chase me overseas, or they can help me file for bankruptcy. The only other alternative to bankruptcy would be to sell my land overseas and pay those credit card companies for the unsecured debts. I have no assets in the USA. The reason that I think that unsecured debt should be treated differently is that, had those debts been secured, say with my piece of land acting as collateral, then the interest rates would have been much lower, down from 32 % to say 6 %. However, the interest rate is so high (32 %) because without collateral, those credit card companies factor into their interest rates that a number of people default on their unsecured loans and the companies recover and still make profit from those who pay. It is unfortunate that I now fall into that group of people that are unable to repay, but I did not enter into these loans with my overseas piece of land as collateral in the first place. The only collateral that I entered those loan agreements with was my credit rating which was (and still is) "Stellar". I reiterate that, Alhamdulillah, I still have the ability to repay and God provides food on the table. However, am I required to sell my piece of land overseas and repay when that land or any other was not used as collateral, or would it be Halal for me to declare bankruptcy ? It pains me greatly that I would lose my credit rating by declaring bankruptcy, but it would pain me more to keep any money to which I am not entitled in a Halal way, so I would really appreciate your input into this matter. Kind Regards and Salam Alaykum, [Question Two] : Dear Prof. Kahf : Al-Salam Alaykum Wa Rahmatullah Wa Barakatuh. Thank you very much for your time and response to my question, Jazakallahu Khairan. I appreciate your view on this matter, although I am having a hard time understanding it. I am not sure what my "own mistakes" were... were they that I invested money in the stock market or that I took almost ~ 0 % loans (for ~ 6 months) from the credit cards, or for losing my job and the market crashing due to the financial crisis ? I am confused because I abided by the rules of the US financial system, and according to those rules, several companies whose stocks I owned and traded declared bankruptcy and left me with nothing. This has cost me all of my savings, and now according to this fatwa, I cannot do the same and declare bankruptcy. Credit card companies factor in that a percentage of the debtors will either default or declare bankruptcy and hence their very high interest rates. On the other hand, I had no capacity for companies whose stocks I owned declaring bankruptcy on me. Maybe this was my mistake, but according to the rules of the US financial system, my only option is to also declare bankruptcy-confusing ! On a different note, my cousin, also in the USA and also lost his job in 2009, is now faced with mortgage payments that he cannot meet. He has put the house on the market for almost a year and it has not been sold, and is now worth a lot less than the loan that he owes to the bank. Is it Halal for him to let the bank foreclose on the house, even if the house is worth than the outstanding loan ? Thanks again and Kind regards, Maseer

جواب الفتوى

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تاريخ النشر

2010-06-10

التخصصات الرئيسية

العلوم المالية و المحاسبية
الأديان
الدراسات الإسلامية

الموضوعات

• الفقه الإسلامي
• الأزمات المالية
• الاستثمارات
• التحوط(المالية)
• الإفلاس
• الربا
• بطاقات الائتمان
• الرهن العقاري
• المدفوعات

عدد الصفحات

1

نوع البيانات

فتاوى

لغة النص

الإنجليزية

رقم السجل

BIM-733949

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