What Happens if the Pledger Doesn't Repay?

1️⃣ Grace period for the insolvent - The pledge is not sold immediately if incapable ﴾If he is in difficulty, grant respite until ease﴿

2️⃣ Request payment from the pledger - If he is capable

3️⃣ If he refuses while capable - He is forced to sell or the judge sells

4️⃣ The debt is recovered from the pledge's price

5️⃣ Any surplus goes to the pledger - If the price exceeds the debt, the difference goes to the pledger

🏠 Islamic Mortgage

The permissible form:

1. The bank buys the property (Murabaha)
2. Sells it to the client in installments (known profit)
3. The property remains as collateral
4. Upon full payment ◄── the collateral is released

❌ The forbidden:

• Usurious interest on delays
• Seizing the property at first delay
• Compound penalties

📊 Pledging Shares and Sukuk

✅ Permissible under conditions:

1️⃣ The shares must be halal (permissible companies)

2️⃣ Known (number, type, value)

3️⃣ Kept with a neutral third party (securities depository center)

4️⃣ Valued at market price upon sale (not at the pledge day price)

🥇 Pledging Gold

✅ Permissible while observing:

📍 Value the gold on the day of pledge (for documentation)

📍 Upon sale: sell at the market price of that day

📍 The difference goes to the pledger or is claimed

⚠️ Beware: Some gold shops charge "storage fees" which are actually disguised usurious interest!

💍 Case: Lending to a brother for marriage

Question: My brother wants to get married but can't afford it. I want to lend him $50,000 to be repaid in 2 years. Is this permissible?

Answer: ✅ Permissible and recommended — one of the best deeds

• ✓ Lending to one in need is recommended
• ✓ Helping your brother marry is charity
• ✓ No profit or extra is required

⚠️ Note: Don't stipulate any extra, and don't accept gifts because of the loan.

🚗 Case: Can I drive the pledged car?

Question: My friend wants a loan of $30,000. I asked him to pledge his car until he repays. Can I drive the car?

Answer: ❌ No, it is forbidden to drive the pledged car

• The pledge is a trust with you
• Using the pledge = loan with benefit = Riba
• Exception: animals are ridden and milked against their maintenance only

✅ Alternative: If the borrower allows you to drive it through a separate rental contract (you pay him rent) ← that is permissible outside the pledge contract

🏠 Case: Difference between Islamic and usurious financing

Question: The Islamic bank finances buying a house through Murabaha, and the house remains as collateral until full payment. What's the difference from a usurious loan?

✅ Permissible: Murabaha, Ijara Muntahiya Bittamlik

❌ Forbidden: Loan with interest

💎 Case: Pledging gold for urgent cash

Question: I need urgent cash. Can I pledge my gold at the jeweler for money?

Answer: ✅ Permissible under conditions:

1. Determine the gold's value on the day of pledge
2. Set the pledge duration and loan amount
3. No extra is stipulated upon repayment
4. If unable to repay: gold is sold at market price and the surplus is returned to the owner

⚠️ Beware: Some gold shops charge "storage fees" = actually usurious interest!

📱 Case: Loan app on the phone

Question: A mobile app offers instant loans. It lends me $1,000 and I repay $1,100 after a month. What is the ruling?

Answer: ❌ Absolutely forbidden — Clear usury

• Stipulated extra = Riba Nassia
• No difference between 10% or 1%, all is usury
• "Usury, even if small, is grave"

✅ The halal alternative:

• Interest-free loan from family and friends
• Charitable organizations
• Interest-free loan funds at mosques
• Islamic financing banks (with their conditions)