Debts, and moving a debt to someone else

This lesson asks you to describe ways money can be transferred among people and businesses, and to explain credit and debt and how they affect financial decisions. The museum offers two records from Islamic law: what a debt is and to what it attaches, and one way of passing a debt to someone else. Banks, cards, interest and the choices a borrower faces today are for your class to bring. ¹

Draw a small diagram of a loan with two people. Label who owes and who is owed, and say what happens when the debt is paid.

Add a third person to your diagram. Say who owes whom before and after, and who agreed to the change.

Picture a debt passed from one person to another. The Kuwaiti encyclopaedia of jurisprudence records that hawala is the transfer of a debt from one liability to another, with three parties: the creditor, the debtor and the one who undertakes payment ^{2 3}. It says the transferor is the debtor, and that hawala differs from surety in that it releases the transferor's liability ³. Of debts in general it records that they attach to the debtor's liability, not to his property, except where secured by a pledge and in a few other cases ^{4 5}.

In a transfer, the record says, the first debtor is released. Who gains and who takes a risk when a debt is passed to a third person, and why?

• Hawala, the transfer of a debt: who the three parties are and how the jurists say a transfer is made.
• Debt (dayn): what a debt is, how it can be secured by writing or witnesses, and how it ends.

Read about hawala, the transfer of a debt. Make a before-and-after diagram for a transfer, with the three parties named.