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Loan to Someone Who Cannot Repay?

Loan to Someone Who Cannot Repay?

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Dear Rabbi,

A friend of mine who is known to burn money and not repay loans is continuously asking me for a loan.

I have heard that one should always give a loan when asked. Should I be giving him a loan?

Answer:

In Judaism, it is considered a great deed to give a loan, even to a rich person. In fact, it is considered to be greater than giving charity, for it does not make the person receiving feel needy and worthless, as if begging for survival.

Not giving a loan to a poor person when one has the available funds to do so is frowned upon in Jewish law. In the words of Maimonides, in his magnum opus on Jewish law, the Mishneh Torah:

The verse has strong words for one who does not lend money to a poor person (Deuteronomy 15:9), “Beware lest there be a defiant thought in your heart… and you look badly upon your poor brother and you not give him.”1

In fact the Rebbe, Rabbi Menachem Mendel Schneerson, of righteous memory, encouraged every community to establish at least one free loan organization. The Rebbe went so far as to encourage young students to set aside some of their allowance for a free loan society so that each class could have its own organization that would loan money.2

Just like there is strong language when it comes to giving loans, Jewish law also uses strong words for those who take loans without the means or the intention to repay them. Maimonides writes:

It is forbidden for a borrower to take a loan and use it when it is unnecessary, and lose it, leaving the creditor without a source to collect the debt. This applies even if the creditor is very wealthy. A person who acts this way is wicked, as Psalms says (37:21), “A wicked man borrows and does not pay.” Our sages commanded (Ethics of our Fathers 2:12), “Treat money belonging to your friend as dearly as your own.”3

The Code of Jewish Law adds, “If one is known to be such a person, it is best not to give a loan at all.”4

However, how can you avoid offending your friend in refusing his loan?

You should try your best to avoid him and not to lie to him by saying that you don’t have any money for him. If he continues to nudge you, you should say that at this time you have no money available. Being sensitive with ones words is very important when dealing with someone in need, no matter how crooked his or her dealings are.5

See Interest-Free Loans: The Greatest Form of Charity.

FOOTNOTES
1.

Paraphrased from the laws of Malvah and Loveh 1:1.

2.

Likutei Sichot vol. 16, p. 625.

3.

Mishneh Torah, ibid 1:3.

4.

Shulkhan Arukh, Khoshen Mishpat 97:4.

5.

See Rabbi Schneur Zalman of Liadi in his Code of Jewish Law (the Shulkhan Arukh Harav), Orach Chayim 156:2.

Dovid Zaklikowski is the director of Lubavitch Archives, a freelance journalist and public speaker. Dovid and his wife Chana Raizel are the proud parents of four: Motti, Meir, Shaina & Moshe Binyomin.
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Discussion (9)
November 17, 2011
to loan or not to loan-that is the question
My granfather taught me that a loan is a gift that you give; and if you get it back, then that too is a gift. But if you cannot afford to give it freely, then you are potentially hurting yourself, and the relationship with the receiver.
Chanah Ariella Rosencrantz
seattle, wa.
November 12, 2011
You are unwise to loan mony to a person like your friend. If you want to give him money with no strings attached, that's kosher but don't loan him anything.
Stephen Eisenshank
Tacoma, WA
November 11, 2011
Loan
If the person is "known" as a bad risk for a loan they could:
1) be a bad risk
2) victim of Loshon Hora that might actually be incorrect, started by a vindictive person....
Food for thought
Shlomo
Ithaca, NY
November 10, 2011
what if
Dear Rabbi, what if the person asks for the loan with the true intention of giving it back and then it is very hard for him to do so ? So every time we see each other I know he is feeling bad and we don't even talk about this. Should I just tell him to forget about it ? but this will be humiliating for him and also this will mean he is not fulfilling his promise.
When he asked for the loan I would have giving it to him as a gift.
Salomon
Bogota, Colombia
November 10, 2011
In my case, I am being repaid by G-d.
When I was a single parent with two young sons, I took in one of my gang member nieces to try to rehabilitate her. Her mom asked me to,, but NEVER sent money to help with expenses. My sister had washed her hands of both daughters and they were living on the streets on bus benches. I should have called social services, come to think of it, but I took her in. The other went to live with her dad,, who gave her to a neighbor. For one semester, I tried with all my might to help this girl, including medical expenses, restaurants (she wouldn't eat home food), etc. Finally, she chose to go stay with her dad and I said FINE. Her dad dropped her off at a bus bench, I found out later. She didn't want to come back to me. My sister's other daughter came to stay and started a fire, so I had to let her go as well. I never was repaid by my sister for any of the costs I had to take care of my nieces. I figure it is G-D who will pay me back, and I did the right thing. Eventually, I had to say NO, tho.
Karen Joyce Chaya Fradle Kleinman Bell
Riverside, CA, USA
November 9, 2011
btw charity and a loan
while it is wonderful that you are so kind to forgive the loan.. however, when one does not repay a loan one is doing something wrong.

I think that the response is saying that if you know that the person will not pay, give him charity, however, giving him a loan will cause him to do something wrong.
marc
November 7, 2011
I've always been of the opinion that I would not loan money to someone I could not afford to lose. So when someone asks me for a loan, so long as I have the means to give the loan, I give it without any questions. If they repay it when they can, then I won't deny them the opportunity to do so (I never ask for interest), but if they forget, or come upon harder times and cannot, then I consider the loan a gift instead. This helps avoid any feelings of distress on either side of a transaction. My friends don't need to stress being able to repay me within any time limit and I don't worry about being repaid.
RF
Mason, OH
November 4, 2011
I think you are Wrong
If you have the money you should always lend it to your friend. Do you honestly believe your friend doesn't want to pay you back? G-d has given you the money for such a person to help him out because his blessings for a living are not as bright as yours. Don't be selfish , and loan him the money as many times as you can remember it's not your money, it's G-d's.
DOV
November 4, 2011
Loan
What should do if loan provider doing evilness for money without understanding the borrower s situation and if the borrower is ready to pay along with the interest % that was not agreed as all things get set and borrower is truly willing to pay all and the same borrower had given loan to lot of friends /relatives without any interest % and not get back anything in the past and not asking for money back or doing any evilness because borrower fallow the law that say live all loan you gave if person cant replay in 7 years on this years you should forget all recovery issues its not my situation . in this situation who is punishable according to law and what in mentioned in law for the evil loan providers ??
it is not my situation but this is happening all over .
Ephraim
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