Chapter 179 : Laws Concerning Loans

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§1

It is a mitzvah to lend money to Jews who are in need, as it is said, "If you lend money to My people, to the poor amongst you," etc. Although it is written "if", our Sages of blessed memory, received the tradition that this "if" is not an option, but an obligation. The Mechilta states that the verse, "If you lend money to my people," denotes an obligation. Why do you say it is an obligation? Perhaps it is really optional (since it states "if ")? Because we can infer from the verse, "And you shall surely lend him," that it is obligatory and not optional. The word "if" written here means, when you lend money, you should lend it to My people, and not to heathens. And to whom of My people? To him that is with you. From this they inferred that your poor relatives take precedence over other poor people, and the poor of your city take precedence over the poor of other cities. The mitzvah of lending money to a poor person is greater than giving charity to a poor beggar, for the latter has already been reduced to begging, while the former has not yet reached this stage. The Torah is provoked with one who refuses to lend money to the poor, as it is said, 'And your eye be evil against your needy brother' etc. Concerning the one who lends to the needy in time of his distress, the Scripture says, "Then you shall call and God will answer."

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§2

Even if a rich man needs to borrow money, it is a mitzvah to lend it to him, and to cheer him with kind words, and to give him proper advice.

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§3

It is forbidden to lend money without witnesses, not even to a Torah scholar unless you are lending against a security. To lend money with legal documentation is the best course to take.

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§4

It is forbidden to demand payment from the borrower, when you know that he is unable to pay. It is forbidden even to appear before him, for he may be ashamed to see the lender, at a time when he is unable to repay the loan. Concerning this it is said, "You shall not be unto him like a creditor."

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§5

Just as the lender is forbidden to demand payment from the borrower, so, too, is the borrower forbidden to withhold his friend's money, and tell him, "Go away and return later," when he actually has the money; as it is said, "Do not tell your friend, "Go away and return later."

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§6

A borrower is forbidden to take the loan, and spend it unnecessarily, and possibly lose it, and thus the lender will be unable to collect it. This applies even if the lender is very wealthy. One who does this is called a wicked person, as it is said, "The wicked borrow and do not repay." The Sages have commanded: "Your friend's property should be as dear to you as your own." If the lender recognizes that the borrower has this character, that he has no consideration for other people's property, it is better not to lend him, than to lend him and be compelled to press him later, thereby violating on each occasion the precept, "You shall not be to him like a creditor."

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§7

If you lend money on a security, you must refrain from using the security, for this is like taking interest. If you lend a poor man money on [the security of] a shovel, or on an axe, or a similar thing, which can be rented out at a good fee, and is only slightly depreciated by use, you may rent it out without obtaining the owner's permission, and deduct the proceeds from the debt, as it may be assumed that the borrower would agree to it. Some Poskim say you may rent out these articles only to others, but not to yourself, lest you be suspected of using them free of charge merely because of the loan.

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§8

If the lender wants to take a security from the borrower, after the loan had been made, he should not do so by himself, but rather through Beis Din.

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§9

You should avoid becoming a guarantor, or a trustee whenever possible.

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§10

If you hold a note of indebtedness against your friend, and the document is worn out, and its script is fading you should go to a Beis Din and have it certified.

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§11

It is forbidden to keep a paid note in your possession, for it is said, "Do not let unrighteousness dwell in your tents."

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§12

Just as you must be careful to guard a deposited article, you must be careful to guard the security even more so; because you are like a paid watchman of the article. And just as a trustee is not permitted to give the article to another person to watch, as will be explained in chapter 188, so is the lender not permitted to deposit the security with someone else, or to give it as a security without the consent of the owner.

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§13

If you lend money to your friend on a security on condition that if he does not repay the loan at a certain date, he will forfeit the security, then you must be sure to tell the borrower when the loan is made, "If you do not redeem the security by such and such a date, it shall become mine retroactive to the present time."

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§14

If you know you owe your friend money, and your friend says to you: "I am certain you owe me nothing," you need not pay him, because he has apparently forgiven the debt.

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§15

When a borrower chooses to repay the lender via a messenger, as soon as he gives the money to the messenger, the messenger acquires the money for the lender. Thereafter, if the borrower has regrets, and wishes to take back the money from the messenger, and repay the loan later, he is forbidden to do so; because this is borrowing without the owner's knowledge. The messenger is equally forbidden to return the money to the borrower.