Shemitat Kesafim and Pruzbul Guide

The Cancellation of Debts Everywhere, Laws of the Shemitat Kesafim and Pruzbul

Foreword: The Cancellation of Debts Everywhere

While the mitzvah of shemitat kesafim, the cancellation of debts at the end of the Sabbatical year, is written outright in the Torah (Devarim 15:1-2), in our day it is not a Biblical obligation. This is because the obligation is contingent on yovel (the Jubilee year) also being in effect, as ruled by the Rambam (Hilchot shemita ve-yovel 9:2):

The cancellation of debts is a Torah obligation in the shemita year only when yovel is in effect, when land reverts to is original owners at no charge. This is a law handed down from Moshe. Our Sages state: When land reverts to its owners then debts are cancelled in all places, in the Land of Israel and abroad; and when land does not revert to its owners, the cancellation of debts is not upheld, even in the Land of Israel.

However, even though the cancellation of debts is not a Torah imperative today, the Rambam rules that it is a rabbinical requirement (ibid., 9:3).
Yet in contrast with shemitat karka’ot, the reversion of land to the original owners—which even the Sages only require in the Land of Israel—the Sages expanded on the prescript of shemitat kesafim, ruling that it must be upheld today not only in Israel but also abroad, as the Rambam explains (Ibid.):

“The Sages state that the cancellation of debts is in effect in this time and in all places, despite the fact that yovel is not in force, so that the laws of the cancellation of debts not be forgotten by the Jewish people.”

Laws of the Shemitat Kesafim

1. Shemitat kesafim is in force today as a rabbinical ordinance in Israel and abroad.
2. Shemita cancels all debts whose date of payment is latest, the day before Rosh Hashanah of the eighth year. In contrast, shemita does not cancel debts that are to be paid after this date. 
3. Debts cancelled today include: monetary loans or in kind, deferred payments (that are recorded), bank accounts, checks, and salaries of employees.
4. Debts created due to the ruling of a rabbinical court or submitted to a rabbinical court are not cancelled.

Pruzbul

Based on the above law, Hillel the Elder instituted a pruzbul. A pruzbul is essentially the declaration of the lender that he has submitted his debts to the rabbinical court and will collect them after the shemitta year. The purpose of this ordinance is so the people not refrain from giving loans, thereby transgressing a severe biblical prohibition: 

1. Beware lest you have a wicked idea in your heart, “The seventh year, the year of release is approaching,” and you will your and not give him . . . You shall surely give him, and your heart shall not be grieved when you give to him; for because of this the L‑rd, your G‑d, will bless you in all your work and in all your endeavors. (Devarim 15: 9-10).
   Pruzbul forms are available at local rabbinates; everyone must prepare a pruzbul.
2. A pruzbul can be written until the end of the shemita year.
3. Debts to charity are not cancelled. Even so, ideally managers of gemachim (free loan societies) should attach to their personal pruzbul the debts to the gemach.
4. CEOs of companies and banks must also prepare a pruzbul.
5. The Sages are pleased with those who return loans after the shemita year.
6.  If a lender did not write a pruzbul, and the borrower nevertheless comes to pay the debt, the lender should say to the borrower, “mashmit ani” (I cancel the debt).  If the borrower says that he is giving the lender the money as a gift, it is permissible to accept the repayment. Should the lender not express his desire to repay the debt on his own accord, it is permissible to persuade the borrower until he agrees to give the money as a gift.
7. Someone who is concerned that a pruzbul will not be written and the debt will be cancelled should explicitly stipulate at the time the loan is given that the debt will not be annulled.
8. Loans given after the writing of a pruzbul that are to be repaid before Rosh Hashanah are cancelled. However, if the date of repayment is after Rosh Hashanah, the debt is not cancelled.
9. There are people who make a point to lend money after the writing of a pruzbul and set the date for repayment before the 29^th of Elul of that year so that it will be cancelled, and thus observe the precept of nullifying debts. Another way to do this is to state a specific loan that the pruzbul will not apply to.
10. Some are of the opinion that the lender can bring the pruzbul to the rabbinical court of his choice. This is the custom according to the opinion of the Remah (R. Moshe Isserles). However, for those who follow the ruling of the Beit Yosef, the pruzbul is to be submitted to an important rabbinical court of the generation. Optimally, the pruzbul should be prepared in front of the same rabbinical court. However, since not everyone has access to thse courts there is a version of the pruzbul in which the lender hands over his promissory notes to two witnesses. They, in turn, sign off that they will serve as the messengers to transfer the lender’s loans to the important rabbinical court of the generation. Using this version of the pruzbul is, of course, contingent upon there being an important rabbinical court that assumes responsibility for pruzbuls.