Islamic Debt Help

Debt is an increasingly worrisome problem. As more of us fall into the trap of buying things we cannot afford, it is more common to seek help. There are many solutions available to many of us experiencing financial difficulties, but for some there is an added complication.

Debt and Islam

In the religion of Islam, debt is considered a serious problem that should be avoided as much as possible. It is understandable that in this modern world and in times of global financial crisis, debt cannot be completely avoided. Even acquiring assets, such as property or a car, will cause you to have to borrow and owe money. Some loans are needed, and that is why Islamic financial products are becoming more and more available. Islamic debt solutions are a natural progression and could be the answer if you are also dealing with your debt burden.

What Debt Solutions Are There?

There are a number of debt solutions readily available and most adhere to Islamic principles of banking and are designed to reduce debt. Some of the debt solutions available include:

Debt management plans: involves making a regular monthly payment on debts until they are paid in full. Interest (Riba) and charges are generally frozen or reduced.

Individual Voluntary Agreement (Trust Deed for Scotland) – involves making monthly payments over a fixed period of time, usually 5 years. If the debts are not paid by the end of the VAT term, the debts are canceled.

Bankruptcy: involves seeking a bankruptcy order through the court and declaring yourself insolvent, completely unable to pay your debts. Debts are settled, but assets, like your home or care, will be used to pay off creditors.

Debt Relief Order (DRO) – Involves making a payment to obtain the DRO through the court. It lasts for one year and if your debts are not paid, they may be canceled.

Consolidation loan: involves obtaining a loan that can be used to pay off all existing debts and then making a monthly payment to pay off the debt over the term of the loan.

Riba (interest)

In Islam, making money with money is prohibited and should only be done through legitimate business, trade, or investment. Riba refers to interest and is considered a grave sin, forbidden by Allah. Riba describes how to make a profit on borrowed money, in which one party invariably pays more than is borrowed and an income is made. Riba is considered a waste of money and does not follow the teachings of the Quran.

“The riba that is practiced to increase the wealth of some people, does not gain anything in God. But if people give to charity, seeking God’s pleasure, these are the ones who receive their reward many times.” (Quran 30:39)

What Islamic Debt Solutions Are Available?

Debt solutions are available to everyone, they are also available to Muslims. If you are struggling with financial problems, there is a great chance to reduce your debt burden and seek debt advice as soon as possible. The availability of solutions may vary based on your level of debt, income, assets, and affordability. Debt management plans are now one of the most popular options for debt relief, as the arrangements made are informal and very simple. Islamic Debt Help can be simple and help you reduce stress and worry.