Declaring Insolvency To Avoid Settling The Debts Of A Deceased

The Deen of Islam advocates truthfulness, honesty, fairness, and justice, whilst Muslims are prohibited from all forms of deception, lies, injustice, etc. If the Muslim Ummah can implement these beautiful teachings of our Deen, perhaps the Kuffar will enter into the fold of Islam by merely observing the character of the Muslims. There wouldn’t remain any need for long lectures and discourses, as they are observing practical Islam on a daily basis.

Based on the above, it is totally impermissible to deceive the banking institute by declaring the deceased estate as insolvent whereas the deceased had left behind valuable assets, whether in the form of a house or otherwise. The jurists have written that on the demise of a person, his wealth should be first utilized in settling the burial expenses incurred. Thereafter, his debts should be settled to the extent that if his debts devour the entire estate, leaving absolutely no inheritance for the heirs, then too payment of debts will enjoy preference over the shares of the heirs. In other words, all the debts must be settled from the estate even though the heirs do not receive a single cent.

It is the duty of the executor/administrator of the estate to ensure that the estate is dissolved correctly as required by Shariah, otherwise he will be sinful of not fulfilling his duties. Also, a person may be declared as insolvent in the world and escape legal implications, but there isn’t any escape in the court of Allah Ta’aala, as Allah has full knowledge of everything. A person will be required to pay back with his good deeds on the day of Qiyaamah for usurping the rights of the creditor. The Ulema have written that 700 accepted Salaah of the debtor will transferred into the account of the creditor for usurping a single Daaniq (that is, a sixth of a Dirham-silver coin), which is a meager amount. What about those debts that run into thousands and perhaps millions? Are we prepared to put our beloved ones through this difficulty?

The rank afforded to a martyr is so lofty that before his blood touches the ground he is forgiven (for his sins) with the exception of debt. He too will be responsible for his unsettled debts. Before performing any Janaazah Salaah, Rasulullah Sallallahu Alayhi Wa Sallam would enquire whether the deceased person had left behind any unsettled debts. If the answer was in the affirmative, he would ask someone else to lead the Janaazah Salaah unless a Sahaabi (radhiallahu anhu) from the congregation would take the responsibility of settling the debts. This is an extremely serious issue and should not be treated lightly, thus we hope that the heirs understand the seriousness of the matter and settle all the debts of the Marhoom as soon as possible, even if it means liquidating all his assets.