Debt remission and prozbul

On the ins and outs of debt cancellation at the end of the shemitah year. Who needs to sign a prozbul? Which debts aren't cancelled? How can I sign a prozbul and also fulfil the mitzvah of cancelling debts? Chapter 28 of the Consumer's Guide to Shemitah.

Rabbi Moshe Bloom

A. Halachic principles

1. Shemitat kesafim, the cancellation of debt, applies today miderabanan.[1]
2. Shemitat kesafim applies both in Israel and abroad.[2]
3. No blessing is said on debt cancellation.[3]
4. Shemitat kesafim applies at the end of the shemitah.[4]
5. It is forbidden to avoid loaning money in fear that the loan will be cancelled at the end of the shemitah year. [5]
6. If one owes money to people who did not sign on a prozbul, who are likely to demand their money back anyway: one should make an effort to repay the loan before Rosh Hashanah of the eighth year.[6] Chazal view favorably those who repay their debts canceled during the shemitah year. [7]
7. When it comes to shemitat kesafim, there is no difference between private individuals or public institutions, such as a municipality or a corporation.[8]

B. Types of debt

1. Halachah relates to several types of debts owed to others:
   1. Debts due before the end of the shemitah.
   2. Debts due following the shemitah.
   3. Loans without a set date of repayment.
   4. Monetary obligation, such as a payment for food or a salary.

C. Debts cancelled

1. The halachic principle is that shemitah cancels all loans that can be collected during the shemitah For this reason, the following types of loans are cancelled on erev Rosh Hashanah:
   1. Debts due before the end of the shemitah year (29 Elul 5782).[9]
   2. Debts without a definite repayment date.[10]
2. Today, the following types of debts are cancelled:
   1. Monetary loans due before the end of the shemitah year.[11]
   2. In kind loans (such as food products or items loaned from one neighbor to another).[12]
   3. Checking accounts at banks (whether a positive or negative balance, such as overdraft).[13]
   4. Checks dated to before Rosh Hashanah of the eighth year.[14]
   5. Wages paid at the end of the work day, such as pay to skilled tradesmen at the end of their work.[15]
   6. Buying on credit when the cost of the item purchased is recorded (such as at a local grocery store).[16]

D. Debts not cancelled

1. There are several types of debts that are not canceled:
   1. Debts that cannot be collected before the end of the shemitah year, such as those due after shemitah.[17]
   2. Debts created as a result of a rabbinical court ruling, or a debt submitted to a rabbinical court. [18] So too, debts owed to orphans who are minors.
   3. Debts with a collateral against them, held by the loaner.[19]
   4. A debt owed by a Jew to a non-Jew, even if the non-Jew converted before the end of the shemitah year.
   5. Loans given to levi'im and poor people at Beit Ha'otzar.
2. Practically, today, the following loans are not canceled:
   1. Salaries of employees paid on a set date each month.[20]
   2. Rent for homes, cars, utensils, and tuition money.
   3. If someone spent money on a friend's behalf, and the friend is supposed to be reimbursed for the expense.[21]
   4. If an item is broken, the object is supposed to be replaced and returned to the owner (even if money is paid instead of the object, this is not a debt that is obligated in debt remission).[22]
   5. If someone committed to donate money to tzedakah.[23]
   6. Purchases made in several payments.[24]
   7. Payments by credit card.[25]
   8. Payment policies of current date plus a certain number of days, when the date of payment is after Rosh Hashanah of the eighth year.[26]
   9. Savings at a bank with exit dates following the shemitah year.
   10. Debts to municipalities, government ministries, etc.[27]
3. Some maintain that debt from a loan given during Elul of the shemitah year is not canceled.[28]

E. Prozbul: shemitah loan amnesty

1. A prozbul is essentially a notification by the lender that he has transferred the debts to the rabbinical court,[29] and will collect the debt after the beginning of the eighth year by the power of the court.[30]  
2. Prozbul forms are available at the locale rabbinate and on the Torah VeHa'aretz website: https://en.toraland.org.il/Toraland/articles/shemitah/prozbul
3. The prozbul can be prepared by the end of the shemitah. It is best to sign it during the last month, Elul.[31]
4. If someone prepares a prozbul at the end of the sixth year,[32] he should prepare an additional prozbul at the end of the shemitah year.[33]

F. Who needs to sign a prozbul?

1. Everyone needs to arrange a prozbul. Men and women (if they have separate bank accounts), yeshivah students, etc.[34]
2. Anyone with a bank account.
3. Anyone who lent money to someone else.
4. Company and bank managers (even if considered a corporation) need to arrange a prozbul. [35]
5. It is also proper that managers of gemachim (free-loan societies) include the debts to the gemach in their personal prozbul forms.[36]

G. Additional laws

1. If a lender did not arrange a prozbul and a borrower comes to repay their debt after the shemitah, the lender should say: meshamet ani, "I remit (cancel) it." If the borrower states that the money is a gift, the lender may receive it. If the borrower does not take the initiative to offer to repay the debt, the lender may convince the former to give the money to him as a gift.[37]
2. Chazal view favorable those who repay their debts, even if the lender failed to write a prozbul, and the debt was cancelled halachically[38].
3. If one is concerned at the time the loan is made that he will forget to draft a prozbul and the loan will be canceled, the lender may stipulate with the borrower at the time of the loan that the borrower will nevertheless pay the debt (regardless of the shemitah year).[39]
4. The prozbul should be signed on the last month of the shemitah year: Elul. If loans are made after signing a prozbul, when due before Rosh Hashanah, they are canceled. If the loan is due after Rosh Hashanah, the debt is not canceled.[40]
5. Those who follow Remah can appoint any rabbinical court to give their prozbul to. [41]
6. Those who follow the Beit Yosef should submit their prozbul to an important rabbinical court. Preferably, it is best for the prozbul to be arranged before this rabbinical court and signed by it.[42] However, since not anyone can access such courts, there is a prozbul form where the lender signs the form in the presence of two witnesses. They sign that they are agents through whom the debts owed to the lender will be submitted to an important rabbinical court.[43]
   This can be done only if there is actually a supreme rabbinical court that deals with prozbul matters.
7. Anyone can sign a prozbul, regardless of whether or not they own land.[44]
8. It is not necessary to actually submit the form to the rabbinical court, or even to send them a copy of the form. The form should be set aside. If the debtor is unwilling to repay the loan, the form can be shown to him.

H. Nedivei Eretz Fund

1. Some go the extra step to lend money after writing a prozbul and set the time of repayment before 29 Elul of the shemitah year so it will be cancelled. By doing so, they can observe the mitzvah of cancelling loans. Another way to do this is by explicitly noting one loan that the prozbul will not apply to.[45]
2. In the 5782 shemitah year, as in the 5775, 5768 and 5761 shemitah years in the past, Torah VeHa'aretz Institute runs a program called Nedivei Eretz, "the generous of the Land." In this initiative, people lend money to a fund and the debt is canceled at the end of the shemitah year. Several funds match the sum individuals cancel, and in this way help families who are drowning in heavy debts exit the circle of debt.
   To participate, one should note the following:
   1. One should verify that a loan that will be cancelled is noted explicitly on the prozbul form, stating the sum of the loan and the identity of the borrower (here the borrower is Nedivei Eretz, and a desired sum).
   2. Those who want to account for the opinion that shemitah cancels loans at the onset, so sign a prozbul during the sixth year, can nevertheless join the Nedivei Eretz fund during the shemitah year. This loan will be canceled, since he must also sign a prozbul at the end of the shemitah year to cancel the debt remission.
   3. It is possible to use ma'aser kesafim (monetary tithes) for this purpose.
   4. The money may be transferred in payments and by credit card even after the shemitah year.
   5. Prozbul forms for Nedivei Eretz Fund are available on the Torah VeHa'aretz website: https://en.toraland.org.il/. Toraland/articles/shemitah/prozbul

[1] Gittin 36–37; Rambam 9:2–3; Shulchan Aruch, CM §67:1. See also Rema, ibid. According to Rambam, Tosafot, and Shulchan Aruch, the mitzvah of shemitat kesafim depends on yovel, the Jubilee year. Since today we do not observe the yovel year, shemitat kesafim applies today miderabanan, not de'oraita. Rashi maintains that shemitat kesafim depends on shemitat karka'ot, land remission—and both are derabanan today. Rema cites authorities who are lenient, and hold that shemitat kesafim does not apply today even miderabanan. On the other side of the spectrum, Itur (s.v. prozbul) maintains that shemitat kesafim is mide'oraita even today.

[2] Shemitat kesafim applies also outside the Land of Israel, since it is a personal and not land-dependent obligation: Rambam, ibid., 9:2–3; Shulchan Aruch, CM §67:1. Some argue, however, that the mitzvah applies today in the Land of Israel only: see Ben Ish Chai, Year I, Ki Tavo §26; Shabbat Ha'aretz 9:3, nn. 4–6.

[3] Because this does not constitute an action (only lack thereof). See Responsa Rashba I §18; Shabbat Ha'aretz 9:2.

[4] As the Torah states: "Every seventh year you shall practice remission of debts" (Devarim 15:1). Chazal learn from here that shemitah only abrogates loans at its end: Arachin 28b; Rambam 9:4; Shulchan Aruch, CM §67:30.

[5] Rambam 9:30.

[6] To avoid transgressing the prohibition of lo yigos ("every creditor shall remit the due that he claims from his fellow; he shall not exact it from his fellow or kinsman," Devarim 15:2), there is a possibility of writing a prozbul on behalf of another person. Contact a local rabbi to arrange for this prozbul.

[7] Mishnah 10:9; Rambam 9:28; Rambam, Gloss on the Mishnah 10:9; Rashas 10:9.

[8] Nita'ei Gavriel 12:8.

[9] According to most Rishonim, the shemitah year automatically cancels debt, even if the lender does not explicitly state "meshamet ani." See Shabbat Ha'aretz 9:28 §1.

[10] Since there is no defined date for remission, the loan can be repaid at any given time. Therefore, it is considered that the time of repayment is during the shemitah year.

[11] Mishnah 10:1; Shulchan Aruch, CM §67:2.

[12] The rationale is that the borrowed object itself is not returned, but rather another object in its stead. For this reason, it is considered milveh lehotza'ah nitnah (a loan given to be spent). See Yalkut Yosef 24:12. See also Ben Ish Chai, Year I, Ki Tavo §26.

[13] Rabbi Eliahu notes that this halachah also applies to savings at banks that can be withdrawn at any time, without exit dates – even if the bank has heter iskah.

[14] See Yam Shel Shlomo, Gittin 4:45; Yalkut Yosef, 24:6; Nita'ei Gavriel 12:8–9.

[15] Rambam (9:11) states: "An account at a store is not canceled, If it is established as a debt, it is nullified. The wages of a worker are not canceled. If it is considered a debt, it is canceled"; Shulchan Aruch, CM §67:15. The Kessef Mishneh explains (9:11) that the laws governing such wages are similar to buying on credit at a store: they can be paid at any time, even after a year or two, and there is not a defined date of payment. For this reason, it can be defined as a loan due following the shemitah year, which is not cancelled. We can learn from here that conversely, wages of a skilled tradesman due at the end of his work during the shemitah year are considered a loan (or debt, milveh). Thus, it would be canceled.

[16] Mishnah 10:1, the first opinion. Rabbi Eliahu rules accordingly. Buying with a credit card is different; see below, §D.2g.

[17] Makkot 3; Rambam 9:9: The example is a loan for 10 years.

[18] Mishnah 10:2; Makkot 3b; Gittin 37a; Rambam 9:15; Shulchan Aruch, CM §67:11. This is the basis of the prozbul enactment; see below.

[19] Rambam 9:14; Sefer Hashemitah, p. 57 §2. For such debts, the injunction of lo yigos does not apply, since the lender has already taken measures to ensure the repayment of the debt by taking a collateral.

[20] For salary paid each month, the obligation to pay occurs only at the date agreed upon between the employer and employee. As long as this date has not yet arrived, the employee cannot collect his salary, and the employer has no obligation to pay him. Instead, they have an agreement that the employee will work and afterwards will receive payment for his work. For this reason, this arrangement is similar to the laws of sachar sachir (salaried employees), which shemitah does not cancel: Rambam 9:11; Shulchan Aruch, CM §67:15; Sefer Hashemitah, p. 57 §3. 

[21] Nita'ei Gavriel 7:4.

[22] Ibid., 7:5.

[23] Ibid.11:1,5

[24] Shulchan Aruch, CM §67:14; Sefer Me'irat Einayim (Sema), ibid., §26: credit at stores paid later on is not cancelled.

[25] Credit given by credit card is essentially a loan that the credit card company gives each month to card holders. The payment of the loan takes place at the billing due date that each credit holder arranges with the company. Because the due date for payment is defined for this type of loan as a set date each month, this is considered a loan with a fixed date and is non-cancellable; Nita'ei Gavriel 12:13.

[26] This form of payment involves credit that the service provider gives the recipient. The agreement between the two parties is that the payment will be made a specific number of days after the services is given. If seems that this form of payment is equivalent to a loan due following the shemitah year, which is not cancelled.

[27] Nita'ei Gavriel 12:6, since if the debt will be cancelled, they will recharge you after the shemitah year.

[28] Since a loan given without a stipulated due date (stam halva'ah) is considered a 30-day loan. It follows that when giving a loan during the month of Elul, its due date will come only after Rosh Hashanah of the eighth year.

[29] Mishnah 10:3–4, and as stated above in §D.1b. See also Shabbat Ha'aretz 9:15–18. Hillel Hazaken (nasi of the Sanhedrin from 30 BCE–8 CE) saw that the wealthy avoided giving loans to the poor, fearing that the loans would be remitted. In this way, they transgressed the Torah prohibition against not giving loans due to shemitah (Devarim 15:9–11), and the poor, who were denied loans, were losing out by this. In light of the situation, Hillel instituted the prozbul to circumvent the cancellation of debt (in a halachically-permissible manner). In this way the wealthy would be willing to lend money while the poor would still receive loans. Rashi explains (Gittin, ibid.) that the word prozbul is an acronym of proz (enactment), bol (wealthy) and butei (poor); an enactment on behalf of both rich and poor. According to most opinions, the prozbul is only valid today when shemitat kesafim is rabbinic; when it becomes a biblical obligation, a prozbul will not be effective. See Shabbat Ha'aretz 9:16.

[30] Gittin 36a; Rambam 9:15, 18; Shulchan Aruch, CM §67:19.

[31] Some maintain that the prozbul should be written up before the shemitah year: Tosefta 8:10; Ibn Ezra, Devarim 15:1; Rosh, Gittin 4:18; Tur, CM §67:32; Shulchan Aruch Harav, CM s.v. loan §36; Urim Vetumim on Shulchan Aruch, CM §67:30; see Shabbat Ha'aretz 9:1, n. 3. However, the plain meaning of the verse "מקץ שבע שנים תעשה שמיטה" (Devarim 15:1), is: "At the end of every seven years, you shall celebrate the remission year" (Living Torah, Kaplan trans.; and not "Every seven years …"; JPS trans.). This clearly indicates that shemitah kesafim occurs at the end of the shemitah year. This is also clearly stated by Sifri (Devarim, Re'eh §111) and Arachin 28b. Most posekim rule accordingly, including:  Rambam 9:4; Ramban, Devarim 15:1; Beit Yosef, CM §67, s.v. ve'ein; and Shulchan Aruch, CM §67:30; see also Shabbat Ha'aretz 9:1, nn. 2,5. About writing the prozbul at the end of the year, see below n. 39.

[32] Those who take into account the opinion stated at the previous footnote, that shemitah cancels loans at the beginning of the year.

[33] Sefer Hashemitah, p. 57 §5.

[34] Rabbi Eliahu; however, women may appoint their husbands as agents to prepare a prozbul on their behalf.

[35] Yechaveh Da'at IV §64. Rabbi Eliahu rules accordingly. On the status of a corporation and its obligation in mitzvot; Minchat Yitzchak III §1; Hakibbutz Bahalachah, pp. 142–3.

[36] Yechaveh Da'at IV §64, s.v. bemasechet gittin. Rabbi Eliahu maintains that it is unnecessary to arrange a prozbul for debts to a gemach.

[37] Mishnah 10:8; Gittin 37b; Rambam 9:28–29; Shulchan Aruch, CM §67:36; Shabbat Ha'aretz 9:29, n. 1; Rashi (Gittin 37b, s.v. vetali) writes that if a borrower approaches the lender to repay the debt, and after lender says "meshamet ani," the lender may nevertheless force the borrower to give him the money as a gift. See also Bach, CM §67, end; Shach, ibid., §67:11; Shabbat Ha'aretz 9:29, n. 4.

[38] Mishnah 10:9; Rambam 9:28.

[39] Makkot 3b; Rambam 9:10; Shulchan Aruch, CM §67:9. See also Sema §18. This is because for any financial matter, conditions made between two parties are valid—even if they negate halachah. In this case, though, the borrower is not saying that shemitah fails to nullify the debt; rather, he is saying that despite the fact that the debt is nullified, he assumes the responsibility to pay it back. It is permitted to assume a financial responsibility that the Torah does not obligate.

[40] While the prozbul does not cancel debts created after it is written, in practice, the loans are not cancelled. The reason for this is that since each loan made after the writing of the prozbul is done at the end of Elul, so their due dates are at the end of Tishrei, following the rule that loans with unspecified due dates are for 30 days (Makkot, ibid.). Loans due after shemitah are not canceled (as noted above, §D.1a). The following rule accordingly: Or Zaru'a IV, piskei avoda zara §123; Devar Avraham I §32:4. The Bach (CM, §67:13) disagrees, maintaining that such loans are cancelled. See Minchat Chinuch (mitzvah 477, s.v. vehineh yesh), who refutes the Bach's arguments.
See also Chatam Sofer, CM §123, who writes that today all loans are considered given conditionally: "that they will not be cancelled by shemitah" (Makkot 3b), and the borrower never believed that the debt would be canceled. Nevertheless, he maintains that it is proper to write a prozbul even today.

[41] The gemara (Gittin 36a) writes that prozbul can be written only in a beit din of Sura or Naharde'a (the two major Jewish communities in Bavel at that time). Rabbeinu Tam (Rosh, Gittin 4:13) states that only an "important rabbinical court of the generation" may write up a prozbul. Similarly, Rambam (9:17) states that only a rabbinical court with experts who have the authority to expropriate money may write a prozbul. Rosh (ibid.) and Remah (CM §67:18), though, are lenient and maintain that any rabbinical court is valid for this purpose. See Shabbat Ha'aretz 9:17. Rabbi Eliahu notes that even according to Remah, it is necessary to arrange the prozbul before a rabbinical court; it is not sufficient to do so before any three people.

[42] Shulchan Aruch, CM §67:18, 21. See also Sema §40.

[43] The formula instituted by Responsa Chikrei Lev, based on Shulchan Aruch, CM §67:21, and as explained by Mordechai, Gittin 4:380 and Mabit II §81: the prozbul need not be singed in the presence of a rabbinical court to effectively transfer one's debt. It is sufficient to sign the form in the presence of two witnesses (who will submit them to the court), even if the court is in another country (such as Rome, as stated by Yerushalmi 10:2). Rabbi Eliahu rules accordingly for those who follow the opinion of the Shulchan Aruch.

[44] Shulchan Aruch, CM §67:22. The writing of a prozbul is contingent on the debtor possessing property (from which the debt can be collected from, so halachically the debt is considered already collected by the court), even if it a small portion of land: Gittin 37a; Rambam 9:19; Shulchan Aruch, CM §67:22. For this reason (in the case that only the lender—and not the borrower—owns land), the prozbul includes the statement of the witnesses: "We have transferred ownership of land to every debtor (who do not have even rented land) in an effective manner." However, If both lender and borrower do not own land, this addition will not be effective. The property does not need to be sold to the borrower; it is sufficient that it is rented or lent; see Shulchan Aruch, CM §63:23.
If this statement is not included, though, it does not disqualify the prozbul. See Chochmat Adam, Sha'arei Tzedek 21:8 – that in general, borrowers (any most all people) have at least four amot of land that either belong, are rented, or at least are lent to him; this is the ruling of Yalkut Yosef §24:48.

[45] Ben Ish Chai (Year I, Ki Tavo §26) enacted this in Bagdad; Rabbi Batzri, Dinei Mamonot I, p. 254. Rabbi Eliahu rules accordingly.