Laws of Lending - Rabbi Yehoshua Lipsh shlita

00:02 Speaker 1 You are listening to “Lemaan Yishme’u,” a podcast of Machon Halacha Chabad.

00:09 Speaker 2 In this class, with Hashem’s help, we’ll discuss the laws of loans. The first part will deal with the obligation to lend—the mitzvah of lending. After that, with Hashem’s help, we’ll discuss the borrower’s obligations to repay the loan. In the Torah, in Parshas Mishpatim, we have the verse: “If you lend money to My people, to the poor person among you.” We know that when the Torah says “if,” it doesn’t always mean, “Lend if you want to, and don’t lend if you don’t want to.” Our Sages taught that here, “if you lend money to My people” means when you lend, because there is a mitzvah to lend. When a Jew needs a loan, there is a mitzvah to lend him money. According to the Alter Rebbe—if you look at the beginning of the laws of loans in the Alter Rebbe’s Shulchan Aruch—the mitzvah of lending is part of the mitzvah of tzedakah. Just as there is a mitzvah to give tzedakah to a Jew who needs it, there is a mitzvah to lend to a Jew who needs a loan. And we know what the Rambam says when he lists the levels of tzedakah, one above the next: the highest level is to support someone who needs a loan, to give him the money before he becomes dependent on others. When you give a Jew a loan and enable him to avoid needing tzedakah, that is the highest level of the mitzvah of tzedakah. For this reason, it is also proper to establish a public gemach, a free-loan fund, in every place. There is a directive from our Rebbeim to do so. The Rebbe once spoke about Shabbos and Yom Tov expenses, explaining that the purpose of such a fund is that a person need not even feel embarrassed to ask for a loan, since the fund exists to provide loans to anyone who needs one. Establishing such a fund is very important. We know that on several occasions

02:11 Speaker 2 the Rebbe took part in this effort. At dinners held for this purpose, the Rebbe sent letters several times, and so on, to encourage the establishment of public gemach funds. A gemach fund should be entrusted to reliable, reputable people. The halachic authorities have set out a number of rules concerning a gemach’s money. In general, care must be taken that the funds are not depleted. If the gemach closes for any reason, its funds must be transferred to another gemach that serves the same purpose. And although we know that money generally loses value, it is still very proper not to make loans with interest or inflation adjustment, even though there are ways to permit this. Gemach funds are meant to make loans without demanding anything extra from the borrower. There are sometimes expenses for checks and the like, however, and those expenses may be charged to the borrower who uses the fund’s money. Now, someone who refrains from lending—someone who is asked for a loan and does not want to lend—violates a prohibition. We know that the Torah says concerning the Shemitah year: “Beware lest there be a wicked thought in your heart, saying, ‘The seventh year, the Shemitah year, is approaching,’ and you look unfavorably upon your needy brother.” What is the verse saying? A person may think that when the Shemitah year arrives, he will lose the money he lent, and therefore he won’t want to lend. So someone who refuses to lend because he fears losing the loan money due to Shemitah violates a Torah prohibition. That is the straightforward meaning of the verse. Even someone engaged in Torah study and the like—because the obligation to lend is a great mitzvah, and sometimes it cannot be done by someone else—should interrupt his Torah study in order

04:11 Speaker 2 to lend. There is the well-known story about the Tzemach Tzedek. A Jew asked him for a loan, and he told him to come after davening. But then he stopped in the middle of his preparations for davening and gave him the money. In the merit of this, after a period in which he had not merited to see the Alter Rebbe—this was after the Alter Rebbe’s passing—he merited to see the Alter Rebbe. In any case, we see both the obligation and the great merit in making an effort to lend money to a Jew. Someone who lends through a heter iska—that is, he makes a loan with a permitted form of interest. Interest is forbidden, but there are arrangements described by our Sages under which he may profit from the loan through a heter iska. We will not deal with the laws of interest in this class, but it is important to know that some arrangements are permitted and others are forbidden. That is a subject of its own. In any case, according to many opinions, a person who profits financially from a loan has not fulfilled the mitzvah of lending as an act of kindness at all, because the mitzvah of lending applies when the lender does not profit. What’s more, even if he wants to use the money to make a profit, and someone else needs it for his livelihood—meaning for food, clothing, and the like—the mitzvah is to give priority to the loan over his own business. And the mitzvah of lending applies even to a wealthy person, unlike the mitzvah of tzedakah, which is for the poor. It appears from the Alter Rebbe that this applies even to a wealthy person who needs things that ordinary people do not need. This is along the lines of the verse, “Enough for his need, whatever he lacks”: even if he was accustomed to having a horse to ride and a servant to run before him, those needs must be provided for him. Similarly, a wealthy person should be given a loan that he can use for the needs he is accustomed to. In practice, the mitzvah

05:59 Speaker 2 of lending applies whether the person provides collateral or not. People mistakenly think that the reason for collateral is to make sure I get my money back. That’s true, but when we look at the Gemara and how the Alter Rebbe explains it, there is a remarkable insight. As the Alter Rebbe explains the Gemara, the mitzvah is to give him tzedakah. But what happens? Many Jews would be embarrassed to accept tzedakah. So you say to the Jew, “Provide collateral. This isn’t tzedakah; it’s a loan. Give me collateral, and I’ll take it. That way I can be sure I’ll get my money back.” When the person provides collateral, he is less embarrassed, the Gemara says; he feels less ashamed. It turns out that the purpose of the collateral is to make it easier for the borrower to take the loan. It’s a wonderful point: the whole reason I take collateral is to make it easier for the other Jew to accept the loan. So the mitzvah of lending applies whether or not he provides collateral. But the halachic authorities write that if you know a person is not careful with other people’s money and will not repay the loan, you are not obligated to lend to him. If you want, you can lend to him only with collateral. Another possibility, though, if he genuinely needs the money, is to lend it with the understanding that you will deduct it from your tzedakah if he does not repay. In other words, you give a Jew a loan of a thousand shekels, taking into account that if he does not repay you, you will cover the amount from your maaser funds and the like. That is permitted. In the book Pele Yoetz, he writes that when doing this, it is proper to tell the person in advance: “Take a loan of a thousand shekels. If you don’t repay me, then it will

07:48 Speaker 2 It will be a gift. Because if he takes a loan from you and doesn’t repay it, there’s a problem. We’ll soon discuss the matter of “the wicked person borrows and does not repay” and these related issues. So, to keep the other person from transgressing, you can tell him explicitly: “I expect you to pay me back, but even if you don’t, I forgive you the debt.” Then, if the other Jew genuinely needs tzedakah, you can cover the loan you gave him from your tzedakah funds. There’s an interesting point in Sefer Chassidim by Rabbi Yehuda HaChassid. He writes that if you don’t want to lend someone money because you’re not sure he’ll repay you, you may not lie and say, “I don’t have any money.” Instead, take collateral. You’d rather say you don’t have any money, right? No—the halachic preference is to take collateral from the other Jew. Still, if telling him, “I don’t trust you,” might hurt him, you’re permitted to say, “I don’t have any,” to avoid hurting another Jew. There’s another matter that not everyone is so careful about, but it’s an explicit ruling in the Gemara, codified in halachah and in the Alter Rebbe’s Shulchan Aruch: when someone lends money to a friend, he must do so either in the presence of witnesses or with a written document. Several reasons are given in the Gemara and by the halachic authorities. But the simple reason is that a person might forget he borrowed the money and, as a result, stumble by failing to repay it. Or, when you demand repayment, he might think he doesn’t owe it; the borrower might think the lender is making a baseless claim against him when he really owes him nothing. Therefore, the halachah rules that, ideally, one must not lend without witnesses

09:36 Speaker 2 or without a written document—without witnesses or without a document—unless the loan is made against collateral. The Alter Rebbe’s wording is that lending with a written document is preferable. Why? With collateral, someone might forget the exact amount of the loan, but when a proper document is written, they remember how much was lent. The exception is an amount so small that people would ordinarily forgo repayment. For example, if you’re stuck without five shekels and ask a friend for five shekels, you don’t have to draw up a document. In practice, it’s simpler to say, “I’m lending you five shekels. If you remember, pay me back; if not, it’s a gift.” That way, you avoid the issue of lending money without a document, about which it is written that someone who lends without a document transgresses “Do not place a stumbling block before the blind.” Why does he transgress that prohibition? Because when he demands the money back, the borrower might deny the debt because he doesn’t remember it, or for other reasons. In practice, nowadays one can also be lenient by having the borrower send the lender an email or text message saying, “I borrowed such-and-such amount of money from you.” After all, the main point of the document isn’t necessarily that it cannot be forged and so on. Its main purpose is for the borrower and lender to remember—for the borrower in particular to remember the debt and not deny it. We aren’t talking about someone who would ordinarily want to deny a debt. So it’s enough, at least, for him to send a phone message acknowledging that he received a certain sum as a loan. Now, the parameters of lending: if you have money, you have a mitzvah to lend it. Someone who doesn’t have money has no obligation to lend. Nevertheless, we see in stories about our Rebbeim, including stories of the Frierdiker Rebbe, that even someone who doesn’t have

11:31 Speaker 2 money to lend and borrows from someone else in order to lend to another person has fulfilled the mitzvah and the great act of kindness involved. If someone promised his friend a loan—that is, he told him, “With Hashem’s help, I’ll lend you such-and-such amount of money”—he may not back out. Why not? Because this is akin to tzedakah. We’ve already said that lending is part of the mitzvah of tzedakah. Just as someone who makes a vow or commitment to give tzedakah cannot back out, so too here: if someone commits to giving his friend a loan, even if he didn’t use the word “commit” but simply said, “I’ll lend you the money,” or something similar, he may not back out. All the more so if he has already set the money aside: the prohibition against backing out is even stronger. The same applies if he set aside a particular sum for a gemach fund; he cannot back out. Another point concerns the prohibition that applies after you’ve lent the money. The Torah says, “If you lend money to My people,” and the verse continues, “Do not act toward him as a creditor.” A person may not act as a creditor. What does that mean? The Gemara says that he may not even appear before the borrower. The Alter Rebbe explains: he isn’t actually pressing him for payment; he merely acts like a creditor. In other words, he doesn’t intend to ask him for the money—he’s only passing by. Nevertheless, if you know the other person has no money to pay, seeing you pass by embarrasses and humiliates him. So you have transgressed the Torah prohibition, “Do not act toward him as a creditor.” I just want to qualify this: nowadays, the prohibition of “Do not act toward him as a creditor” applies less often. The Alter Rebbe writes that if

13:18 Speaker 2 the other person has money—or even if he has no money but does have movable possessions, and some halachic authorities write that this applies even if he has land—you are not considered to be acting as a creditor. The Alter Rebbe says more than that. When collecting a debt, the halachah allows you to collect only certain things; other things must be left to the borrower so he can live. What must be left? Food for thirty days, for example. Yet even if all he has is food for thirty days, which the lender cannot collect from him, the prohibition of “Do not act toward him as a creditor” still does not apply. Why? Because the borrower can choose to give that food to the lender. So this prohibition is transgressed only if the borrower has no money at all, no movable possessions he can sell, and no home. In fact, if a person has Rashi tefillin—and certainly if he has Rabbeinu Tam tefillin—halachically he can sell them and repay the loan, so the lender does not transgress “Do not act toward him as a creditor.” Likewise, someone who is unsure whether his friend has money does not transgress “Do not act toward him as a creditor” by demanding repayment. That prohibition means you know he has nothing and ask him for the money anyway. If you don’t know, you don’t transgress it, as the halachic authorities write. Certainly nowadays, it is unlikely that someone has absolutely nothing—no home, no possessions, no electrical appliances, and nothing else he can sell to obtain money and repay the debt. In such a case, the lender does not transgress “Do not act toward him as a creditor.” Another point to remember: various laws govern bringing a claim

14:48 Speaker 2 before a beis din, and of course there is the matter of a din Torah. But strictly speaking, if someone has property belonging to his friend, and that friend owes him money, he can withhold the property, since his friend owes him money. Nevertheless, the Zohar speaks very sharply about someone who has received an item for safekeeping from his friend: he must not withhold it for any reason. If your friend gave you something to look after, don’t keep it from him. The Zohar uses very strong language, speaking about the person’s soul and so on. In any event, this is also brought as halachah in works on the revealed dimension of Torah, in Choshen Mishpat and elsewhere. When someone has entrusted something to a friend, he needs to take care. Now let’s talk a little about the borrower’s obligation. Some people feel that repaying a loan is some sort of recommendation. I once met a Jew who told me he owed someone ten thousand dollars and couldn’t pay it back, so for a long time he didn’t repay the loan. One day, the son of the man who had lent him the money was getting married. In his great joy, the lender told the borrower, “Look, I forgive you the debt.” The borrower said, “Oh no, where am I going to find a thousand dollars for maaser now?” Of course, quite simply, the obligation to repay a loan is far greater than the obligation to give tzedakah. It is a matter of halachah, and our Sages say very strong things about it. A person needs to know that if he has taken a loan, he must make an effort to repay it. Certainly, his obligation to repay the loan is greater than his obligation to give tzedakah. So if the ten thousand dollars in the story I told didn’t bother him, I don’t understand why the thousand dollars of maaser did. In any case, our Sages said, “Repaying a debt is a mitzvah.” That is, the borrower has a mitzvah to repay the debt—the loan.

16:51 Speaker 2 A person may not put off his friend by saying, “Go and come back.” It says in Mishlei: “Do not say to your fellow, ‘Go and come back, and tomorrow I will give it,’ when you have it with you.” If you have the money, you may not put the person off. And if you know he has no way to collect the money because he has no means of taking action against you, then you are violating a prohibition. If a person does not repay a loan, he also violates a prohibition in the Torah: “Do not withhold what is due.” And Tehillim says something very sharp about this, which is also cited by the halachic authorities: “The wicked borrow and do not repay.” A person who does not repay the loans he takes is called wicked. The Alter Rebbe makes a very significant point: even if you do not have the money to repay the loan, a person can work, but he does not want to. We will soon learn that a person is not obligated to work in order to repay a loan. If you have money, you must repay it. You are not obligated to work, says the Alter Rebbe. Nevertheless, if you do not go and repay the money even though you have nothing, you are still called “the wicked borrow and do not repay.” In other words, you are called wicked if you do not repay the loan even though you do not have the money to do so. That is what the Alter Rebbe writes. In practice, if the borrower has the means to repay and does not want to, the law is that beis din compels him. The wording in halachah is that they strike him until his soul departs. It is a mitzvah. You cannot evade this mitzvah. It is a mitzvah like all the others: you have to repay the loan. A borrower may not spend the money he borrowed if he knows he may use it up and then have no way to repay it. If it is for food, that is one thing, but sometimes

18:27 Speaker 2 a person feels like traveling abroad, or even doing something holy. I am not speaking only about mundane matters, but about things he is not obligated to do. He takes a loan and does not know where the money to repay it will come from. If you take a loan and do not know how you will repay it, you may not take the loan. Strictly speaking, once the lender has given the money, he cannot tell the borrower, “No, no, I do not want you to use it for this purpose or that one.” But if he sees that the borrower is spending the money and will then have no way to repay it, he can go to beis din and ask them to collect the money from him now, because otherwise he will not be able to repay. Halachah states that if a person has debts, he should not give extensively to tzedakah until he has repaid them. That is the wording in halachah. In other words, a person should not try to be righteous and start giving a great deal of tzedakah while he has not yet repaid his debts. Before the matter of maaser from one’s income and so on, before those matters, a person has an obligation to repay his loans. Of course, if someone lent you ten thousand shekels and the repayment date is still a long way off, or he spread it out into very small payments, then certainly you should give maaser as is customary. But if the repayment date has arrived and you do not have the money to pay, according to halachah repayment takes precedence over maaser. Maaser is a custom; ah, the obligation to repay a loan is a Torah obligation. You may not give money to tzedakah when you still owe repayment of a loan to another Jew. If, as we discussed earlier, you truly have nothing with which to repay—if a person has no money to repay the loan—then it says that he cannot be compelled to work.

20:11 Speaker 2 That is, the obligation to repay the loan means that if you have money, you must repay it, but a person cannot be compelled to work. That is what appears in halachah. There is a dispute among the early authorities about this in Tosafos. In any case, that is how the halachic authorities rule. The Alter Rebbe also rules that a person cannot be compelled. But the Alter Rebbe says: yes, nevertheless, if he does not repay the loan, as we said earlier, he is called one of whom it says, “The wicked borrow and do not repay.” In practice, whatever a person owns, he must sell his possessions and repay the loan. The halachic authorities discuss something called “arranging for the borrower.” What does that mean? They do not take absolutely everything he has; after all, he needs to be left with some food and some clothing. Halachah sets out exactly what may be left to the borrower. In practice, some halachic authorities have written that nowadays, given the circumstances, the law has changed, and under the enactment a borrower is allowed a few more things for his livelihood. But strictly speaking, the borrower certainly has an obligation to make every effort to repay the loan, even if he has to sell his property to do so. Halachah even says that if he has an apartment, he must sell the apartment to repay his loans. That is what it says. If someone gives a person money on condition that he use it for himself, not to repay a debt—unfortunately, this too is common with people who have debts. I am speaking now about debts owed to individuals. Someone comes along and says to him, “Look, I see that you urgently need to travel for a particular reason. I want you to go. Travel to the Rebbe. I am giving you the money to buy a plane ticket.” In practice, in such a case you cannot take that money and give it to the lender. You may use that money for the purpose

21:52 Speaker 2 for which that person gave it, because he gave it from the outset for a specific purpose. The same applies when parents help their children financially with household living expenses and the like. If they say explicitly that the money is intended to buy food and clothing for the children and so on, that money does not have to be given to a creditor. You must use the money for what the parents gave it for. If they gave it for clothes or toys or other clothing for the children, that is what you must do with the money. Even if several years have passed and the lender has not demanded repayment, the borrower is still not released from the debt. We do not say that the lender has given up hope. “I took a loan from him five years ago, and he has not said a word.” There are even opinions that if the borrower has heard that the lender has given up hope, the debt still has not been forgiven—unless the lender explicitly says that he forgives the debt. As long as he has not explicitly said that he forgives it, the debt remains. Another thing written in halachah is that the borrower may not, in the wording of halachah, look for ways to evade his creditor. Sometimes a person says: “If I repay the... Suppose I owe ten thousand dollars. I will come to the lender and say, ‘Listen, I do not have ten thousand dollars. Do you want seven thousand dollars? Take it and forgive me the rest.’” What will the lender do? He has little choice; presumably he will say all right. A person may not do such a thing. You may not evade payment and force the lender to waive the debt. There are certain cases—we will not go into them now—where the lender may even be able to say, “I agreed under a mistaken assumption. I did not intend to forgive the debt. I intended only to get the seven thousand dollars. I did not intend to waive the entire additional three thousand dollars.” But in any case, the lender—the borrower

23:35 Speaker 2 the person who took the money, on his own part, may not evade payment, look for pretexts, or look for excuses not to pay. Rather, he is truly obligated to make every effort to pay and return the money on time. If, G-d forbid, a situation arose in which the borrower did not repay the money and the lender summoned him to a din Torah and the like, then the borrower does not have to pay the expenses. That is the halachic ruling. But if the lender brought him to court because he refused to go to a din Torah, and the lender had to pay for a lawyer or enforcement proceedings and the like, then there is room to say—we will not go into it now; there is some discussion of this among the halachic authorities—but many authorities write that the borrower must also pay the expenses. Why is this relevant? Sometimes a gemach or an individual draws up loan agreements. It is appropriate to write this explicitly into the agreement, certainly for a gemach fund that constantly lends to people and, unfortunately, sometimes ultimately has cases that reach beis din. So it is appropriate to state explicitly in the loan agreement that if the lender or the gemach fund has to incur expenses, go to court, pay a lawyer’s fees, or incur any collection expenses, the borrower will bear those expenses. Once there is such an agreement between the lender and the borrower and the borrower has signed it, the borrower is obligated to abide by it. There are things in halachah sometimes called an asmachta, meaning a commitment that a person did not really intend to pay. But in this case, the halachic authorities agree that we do not say there is an issue of asmachta that would mean he is not obligated to pay. Rather, he is certainly obligated to pay if he signed an agreement stating that, should the lender incur expenses, the borrower would have to pay them. So the borrower really must pay all the expenses the lender claims from him. Let us now discuss laws relating to loans in the Shemitah year. With Hashem’s help, next year

25:27 Speaker 2 The year 5782, coming upon us for good, is a shemittah year. The main laws and topics people usually discuss concern shemittah of the land. But in practice, we need to remember that shemittah has two sets of laws: shemittah of the land and the cancellation of debts, known as shemittas kesafim. What does shemittas kesafim mean? When the shemittah year arrives—we’ll soon look at the different opinions—a person’s debts are canceled. This is stated explicitly in the Torah. There is a verse in Devarim: “At the end of seven years you shall make a release. And this is the manner of the release: every creditor shall release what he has lent his fellow; he shall not press his fellow or his brother for payment, for a release has been proclaimed for Hashem. You may press a foreigner for payment, but whatever of yours is with your brother, your hand shall release.” In other words, money one Jew owes another as a loan is canceled in the shemittah year. The Gemara says that this law of shemittas kesafim applies only when the Jubilee applies. In the Gemara’s words, “When you release land, you release debts.” That is, when the Jubilee was observed, land would return to its owners in the Jubilee year. Even if a person had sold land—there are several kinds of land involved, but in any case, in some instances the land would return to its owner. When someone had sold land and it came back to him, this is called, in the language of the Gemara, “When you release land, you release debts.” In other words, when the Jubilee applies, shemittas kesafim also applies. But nowadays, according to the overwhelming majority of halachic authorities, and as ruled in the Shulchan Aruch, the mitzvah of shemittas kesafim does not apply by Torah law. Nevertheless, it does apply by rabbinic law. And unlike shemittah of the land, which applies specifically in Eretz Yisroel, shemittas kesafim is not tied to Eretz Yisroel. It applies both in Eretz Yisroel and outside it. So

27:27 Speaker 2 In practice, the halachah today is that when a person owes someone money, the debt is canceled when the shemittah year comes. We’ll soon discuss exactly when during the shemittah year the debt is canceled, according to the different opinions. The Shulchan Aruch addresses this, and even earlier there is a responsum of the Rosh. As is known, the Rosh lived in Ashkenaz early in his life. After the persecutions, Maharam of Rothenburg was captured and died in prison. When Maharam of Rothenburg died, they wanted to capture the Rosh, and he fled to Spain. The Rosh writes in his responsum: “From the day I arrived in this land, I saw that people customarily collect debts even after shemittah.” In the Rosh’s words: “I cried out like a crane to abolish the custom.” The Rosh tried forcefully to abolish it, but they did not listen to him. The custom was that debts were not canceled after shemittah; people continued to collect them. If someone had lent money to another person before shemittah, the custom there was to collect it afterward. The halachic authorities—the Rosh himself, and later authorities following him—gave a reason for this, and the Alter Rebbe also cites that reason. Why, then, has the custom developed not to observe the laws of shemittas kesafim? To put it in the Alter Rebbe’s words: in a place where the custom is to collect debts even after the shemittah year, it is considered as though, when the money was borrowed, it was borrowed on condition that the borrower undertook to pay it even after shemittah had passed. There is a halachah concerning shemittas kesafim: if, at the time of the loan, a person stipulates to his fellow, “I am making it a condition that the debt will not be canceled by shemittah,” the debt is canceled. Why? As the Gemara says, that is making a stipulation contrary to what is written in the Torah. The Mishnah says that anyone who makes a stipulation contrary to what is written in the Torah has made an invalid stipulation. But if a person does not

29:33 Speaker 2 say that the debt will not be canceled by shemittah, but instead says, “I undertake to continue paying the debt even after shemittah,” then it is like any monetary agreement between two people, and it is valid. So in places where the custom was to collect debts even after shemittah, it turns out that when someone gave his fellow a loan, there was an unwritten condition: the borrower undertook to pay it even after the shemittah year had passed. In practice, the Alter Rebbe and other halachic authorities did not want to rely on this. What can be done instead? There is a solution already mentioned in the Mishnah. The Mishnah in tractate Shevi’is says that in the time of Hillel the Elder, he saw that people were refraining from lending to one another, thereby transgressing what the Torah says: “Beware lest there be a wicked thought in your heart, saying: The seventh year, the shemittah year, is approaching.” In short, he saw that people were indeed refraining from lending. Despite the Torah’s commandment and its prohibition against refraining from lending, people were refraining from it. Hillel said: Let’s find a solution. The solution he instituted is called a pruzbul. What is the idea of a pruzbul? Before shemittah, a person comes to a beis din and tells them: “I hand over my debts to you so that I may collect them whenever you wish—whenever I wish.” The Alter Rebbe’s wording introduces a novel point here: when a person makes a pruzbul, it is as though he has transferred the debt to the beis din. There is a concept of a person handing over his loan documents to a beis din—actually giving the documents to them. When he physically hands them over, the debt is not canceled by shemittah, because the debt no longer belongs to a private individual; it belongs to the beis din. In practice, a pruzbul is similar to handing over one’s loan documents to a beis din. In any

31:38 Speaker 2 event, Hillel and the Sages after him, and later, in the time of the Amoraim, established and maintained this practice of pruzbul. What does pruzbul mean? Before the shemittah year, a person hands his debts over to a beis din, telling them that he will collect them whenever he wishes. In practice, the Alter Rebbe says, although we said earlier that some halachic authorities hold that nowadays the obligation to cancel debts does not apply because it is like a condition the parties made, nevertheless, every G-d-fearing person should be stringent for himself. That is, everyone should be careful to make a pruzbul and not rely on what the Rishonim, and later the Acharonim following them, wrote about the custom not to cancel debts. The Alter Rebbe writes: “Every G-d-fearing person should be stringent for himself and make a pruzbul, for it involves no loss and is easy to arrange.” In fact, the halachic authorities express many opinions about how a pruzbul may be made. Generally speaking, some say it can be made only before an important beis din—that is, not just any beis din, but a central, prominent one. Not everyone can make a pruzbul before just any beis din. Many halachic authorities ruled this way, and many Jews are indeed careful to make a pruzbul specifically before an important beis din. There is also a question about what counts as an important beis din. Does it mean the most important beis din in that location? There are several opinions about that too. But the Alter Rebbe was not as stringent as those opinions, even though they are opinions of the Rishonim that many Jews follow today as well. The Alter Rebbe writes that, in practice, one may gather three qualified men to serve as a beis din and tell them: “I hereby hand over to you all the debts owed to me, so that I may collect them whenever I wish.” In fact, we know from the laws of judges that it is explained there that when there are

33:51 Speaker 2 Three people who are qualified to serve as judges—three people who are not disqualified, who have not committed transgressions and the like. These three people, who observe Torah and mitzvos, are qualified to serve as judges. Why? The law is that any three such people are qualified, as we learn from the verse. So when he sits before them, they already have the status of a beis din, and he can tell them that he is handing over his debts to them. He does not say, “I appoint you”; he says, “I hand them over to you.” They are already a beis din in their own right. He hands over to them all the debts owed to him. We should also mention that some authorities say this must be done in writing, but according to the Alter Rebbe, it does not have to be written down. It can be said orally. The Alter Rebbe ruled in accordance with the authorities who say one may declare orally: “I hereby hand over to you all the debts owed to me, so that I may collect them whenever I wish.” The Rebbe spoke about how the most convenient time to do this is at the end of Hataras Nedarim on Erev Rosh Hashanah. The beis din is already there, and this way he will not forget. He can say to them, at Hataras Nedarim, “I hereby hand over to you all the debts owed to me, so that I may collect them whenever I wish.” The Rebbe also spoke about, and encouraged efforts on behalf of, people who are not in shul for Hataras Nedarim, so that they too should make a pruzbul if possible. How can they do that? A beis din can prepare a pruzbul document, and the person can join in. Essentially, he signs a statement handing over the debts owed to him to that beis din in a particular place. The Rebbe said that, in practice, there are other details of the halachah that can be taken care of this way as well, ensuring

35:37 Speaker 2 that the pruzbul is done properly, as we will soon discuss when we turn to some other details to remember about the laws of pruzbul. Now, when does shemittah actually cancel debts? There is a major disagreement among the Rishonim, between the Rosh and the Rambam. The Alter Rebbe ruled like the Rosh, unlike the Rambam and other Rishonim, and unlike the accepted halachic ruling. The Rosh says that the process of canceling debts begins at the end of the sixth year, as soon as the seventh year begins. More precisely, from the end of the sixth year, the lender is already forbidden to demand payment from the borrower. At the end of the seventh year, the debt is canceled completely. The Rosh derives this from the verses, and the Alter Rebbe cites it. If we look at the verses, the wording is: “He shall not press his fellow or his brother, for a shemittah has been proclaimed for Hashem.” In other words, as soon as the shemittah year begins, it is forbidden to press one’s fellow for payment of the money he owes. True, the debt itself is canceled only at the end of the seventh year, so if the borrower repays the money of his own accord in the sixth year— in the seventh year, that is fine. But according to the Rosh, the pruzbul must be made at the end of the sixth year, not at the end of the seventh. Why? Because you make a pruzbul while you are still able to collect the debt, and in the Rosh’s view, you can no longer collect it during the seventh year. The Rambam, in fact, ruled that one can still collect a debt during the seventh year; the laws of the cancellation of debts take effect only at the end of that year. According to him, a pruzbul can therefore be made until Erev Rosh Hashanah following the seventh year. The disagreement between the Rosh and the Rambam depends on a difference in the text of the Tosefta. We will not go into that now, but the Alter Rebbe ruled plainly like the Rosh: the time for the pruzbul is at the end of the sixth year. That means that at the end of—this year, at the end of 5781,

37:52 Speaker 2 a pruzbul must be made. At the end of the halachah, the Alter Rebbe adds that if someone did not make a pruzbul at the end of the sixth year, he should make one during the seventh year, before Rosh Hashanah following it. In other words, if for some reason a person did not make a pruzbul in the sixth year, he can, after the fact, rely on the Rambam’s ruling and make it by the end of the seventh year. We should mention that there were years when the Rebbe himself made a pruzbul both at the end of the sixth year and at the end of the seventh year. The Rebbe explained that, according to certain opinions, a question arises about loans made during the seventh year itself. After all, a pruzbul made at the end of the sixth year will not cover debts arising after that pruzbul, so an additional pruzbul is made. That is what the Rebbe did in some years at the end of the seventh year, apparently for those loans made during the seventh year. Another particular law concerning pruzbul: it says that a pruzbul can be made only if the borrower has land. The Rishonim give several reasons for this, but in any case, the halachah is that a pruzbul can be made if the borrower has land. We should mention the reason given by Rashi and other Rishonim: the pruzbul was instituted only for the majority of debts, ordinary debts. Ordinarily, a debt can be collected from land. If there is no land, that sort of debt is less common, and the pruzbul was not instituted for it. That is Rashi’s view, and we will not go into the reasoning further now. The Alter Rebbe holds this way too. So in practice, if someone borrows money and has no land, the lender cannot make a pruzbul. Let us take an example that may be familiar to some of you. A young man supported by his father has no land and no room of his own, whether rented or purchased. If he borrows money from another young man or from someone else, it is not certain

40:01 Speaker 2 that a pruzbul can be made in the ordinary way. Why not? Because the borrower has no land. So what is the solution? The solution already appears in the halachic authorities: the lender grants the borrower some land. Suppose the lender has land. He says, “I am lending— I am granting the borrower four cubits of my land temporarily.” In other words, for the purpose of the pruzbul, he grants him a portion of his land for a certain period, and on that basis a pruzbul can be made. So when making a pruzbul, if someone knows that a person who owes him money has no land, and it is a loan he wants repaid after the seventh year, he should make sure to grant the borrower land in this way. He can even grant him land verbally. We will not go into the ways of doing that now, but he can grant land to the borrower. When the Rebbe spoke about a pruzbul document prepared by rabbis for people who do not stand before the beis din, the Rebbe said that this arrangement can also provide for land to be granted to the borrower. So if someone has a loan he took from a person who—if someone has lent money to a person who has no land, he should see in advance how land can be granted to the borrower. He can simply sign the document that was surely publicized by the Chabad rabbis, provided the document makes clear that, through it or by some other means, the rabbis will see to it that the borrower acquires some land to which the pruzbul can apply. One more point: sometimes a loan has a set repayment date. Suppose someone borrows five thousand dollars for two years. He takes the loan now, in 5781, and they agree that he must repay it in 5783, in the middle of 5783,

42:20 Speaker 2 after shemittah. In that case, shemittah does not cancel the debt. Why? Shemittah cancels only debts that can be collected during the seventh year. If a debt cannot be collected during the seventh year, then the seventh year—shemittah cannot cancel it. It does not cancel it. So when the agreed repayment date falls after the shemittah year, the debt is not canceled.