The bankrupt in the language is the one without money and the one without that which he would pay for his needs. It is meant by this that he reached a situation in which it is said about him, ‘There is no money with him’ so he is muflis. Muslim narrated via the way of Abu Hurairah (ra)

This statement of theirs is information about the reality of the muflis and the Prophet (saw)’s statement,

It is allowed not to negate the reality but rather he intended that the bankrupt of the Hereafter is more severe and enormous such that the worldly bankrupt becomes like the rich man in relation to him. The bankrupt in the convention of the fuqaha is the one whose debts are greater than his wealth, and his expenditure greater than his income. They called him bankrupt even though he has money because his wealth deserves to be spent in the way of his debts so it is as if it is absent.

Whenever the debts of the person are obliged immediately and his money does not pay them so his creditors ask the judge to hijr him, it is obliged upon him to respond to them. It is recommended to announce the hijr upon him so that people avoid transacting with him. If hajara is sentenced upon him, four rules are established by that:- The first of them is rights of the creditors relating to his designated wealth. The second preventing the disposal of his wealth. The third is that whoever finds his designated wealth with him has more right to it than the remaining creditors if the conditions exist. Fourth, the judge sells his wealth and pays the creditors. The evidence for the hijr over the bankrupt is what K’aab bin Malik narrated

And it has been narrated from Abdurrahman bin K’aab:

When there is established over the bankrupt the rights of people or that which obliges a money fine via trustworthy testimony or a correct confession from him, in this case all what he has is sold and the creditors treated equitably. Nor is it in principle allowed that he be imprisoned just as it is absolutely not allowed to imprison a debtor in difficulty due to the statement of Allah (swt):

And due to what Muslim and Abu Dawud narrated from Abu Said Al-Khudri who said:

This does not indicate imprisoning the debtor but rather only indicates imprisoning the one upon whom maintenance is obliged, if he does not maintain the young child. Maintenance is from the money which is obliged upon the one capable to provide maintenance. This indicates the imprisonment of the one who does not provide for the young child alone.

The rule regarding the bankrupt is that the judge sells to the creditors the debtor’s wealth and divides it among them in portions as there is no way to do them justice other than this. It has been narrated from Umar bin Abdurrahman bin Dalaf that a man from Juhayna would buy camels to a deferred period so they became high in price. He became bankrupt and raised it with Umar bin Al-Khattab (ra): ‘As for what follows, O people. Verily Al-Asfa Asfa Bani Juhaynah is pleased with his debt and trustworthiness that it be said the debts overtook him. So whoever has something over him, let him come early in the morning for we will divide it in lots.’ It has been narrated about Umar bin Abdulaziz that he judged the bankrupt that his wealth be divided between the creditors and then he is left until Allah (swt) provides sustenance for him.

The bankrupt’s wealth which is found with him is divided between the creditors by shares by value between those claimants present and seeking where time of their rights has fallen due only. There does enter among them the one present but not claiming or the absent who did not delegate or the absent whose time of his right has not fallen due whether he claims or not. This is because the one where the time of his right has not fallen due has no right yet while the one not claiming is not obliged to be given as long as he is not claiming. This is where the bankrupt is alive. As for the deceased bankrupt, it is judged for everyone, present or absent, claiming or not, and each one with a debt whether immediate or to a named period. This is because all periods fall due by the death of the one with the right or the one against whom there was a right. If there combines upon the bankrupt the rights of Allah (swt) and the rights of the slaves (‘ibad), the rights of Allah (swt) precede the rights of the slaves. So it is commenced with what he missed of zakat or expiation; if it does not cover everything, this is divided upon all these rights by lots without altering anything with another. Similarly the debt of people; if his wealth does not pay all of them then each one takes up to the level of his money of what exists. The evidence that the rights of Allah (swt) precede the rights of the slaves is what is established by the Messenger of Allah (saw) that he said:

And his (swt) statement:

When the wealth of the bankrupt is sold, his maintenance and the maintenance of the one whose maintenance is obliged upon him is considered so his house which he has need of residing therein is not sold. Whereas if he has two houses and has no need of one against the other, the one which he does not need is sold. If the bankrupt earns what furnishes provisions for him and furnishes provisions of those whom he must maintain or he is able to earn that practically by hiring himself, in this situation all his wealth is sold except his house which is a must that he reside therein. If he is unable to perform with out any of that, it is left for him that which suffices him and maintains him and those whom it is obliged upon him to furnish provisions for according to what is reasonable from wealth until he finishes from its division between his creditors.