Question: I recently loaned money to a friend who has been able to repay only part of it. This was an interest-free loan. We exchanged a signed IOU, not a proper shtar with witnesses, since I have always trusted her integrity and only wanted a document that confirms what was loaned and what was repaid. Now that shemittah is approaching, what should I do? Should I forgive the loan? And if my friend is not able to repay it, may I deduct the unpaid money from my ma’aser requirement?
Name Withheld
Summary of our response up to this point: The Torah (Exodus 23:10-11) tell us that all land must lie fallow every seventh year. Any produce that grows on its own is hefker and may be taken by anybody, especially the indigent. The Rambam writes that in addition to shemittat karka, remission of land, there is also shemittat kesafim, the remission of monetary matters, when shemittah arrives. Our Sages ruled that the shemittah laws still apply (rabbinically) despite the fact that the Temple was destroyed and the Jewish people are dispersed throughout the world.
Hillel the Elder (Shevi’it 10:3) feared that people would refuse to aid the poor and withhold loans as shemittah approached knowing the debts would soon be forgiven. Therefore, since shemittat kesafim is only a rabbinic law nowadays, he invoked the principle of “Et la’asot LaShem, heim heferu Toratecha” and created a document that would enable people to collect loans despite the arrival of shemittah. The document is called “prosbul,” a Greek term implying it helps both the rich and the poor. The rich won’t lose their money and the poor will be able to borrow money as shemittah approaches.
The Ma’hari ben MalkiTzedek writes that one should ideally draw up a prosbul document at the end of the sixth year, prior to Rosh Hashanah of a shemittah year, so that every loan from the preceding six years remains collectible. We also write a prosbul at the end of shemittah so that loans of that year continue to be collectible into the eighth year; the cancelation of shemittah-related loans occurs at the conclusion of the seventh year. In fact, the document need only remain intact on the last day of the seventh year. Even if one destroys the document afterwards, the loan remains collectible.
We reviewed Rabbi Moshe Sternbuch’s discussion on whether there is really a need for a prosbul. After all, as the Chelkat Yoav (#46) writes, the lender can forgive timely payment and extend the length of the loan on the eve of Rosh Hashanah of motza’ei shemittah. The Mahari Engel argues that one cannot forgive a loan against the borrower’s will. But Rabbi Sternbuch concludes that if both the lender and borrower agree to an extension, even if only verbally, their agreement is legal and effective.
Rabbi Ovadya Yosef cites numerous halachic authorities who rule that public charities (gemachs) and banking institutions are not required to execute a prosbul. He quotes Psalms 89:3: “Olam chesed yibbaneh – The world is built upon (i.e., exists due to) gemilut chesed,” and explains that the world cannot exist without these loans from gemachs and banking institutions.
Last week, we cited Rabbi Menashe Klein’s discussion of shemittat kesafim with regards to checks. Rabbi Klein explains that a check is actually a promissory note, similar to a banknote, which is used to collect cash to satisfy a loan. The cash itself is held by the bank, not the debtor. Thus the bearer of a check is considered to be in possession of his money. He has, in effect, already been paid and shemittah therefore does not cancel the debt since the debt no longer exists.