BOOK OF CONTRACTS · 76 – WHAT SHOULD BE DONE IF A PERSON GOES BANKRUPT AND THE CREDITOR FINDS HIS PROPERTY WITH HIM?
Abū Hurayrah, may Allah be pleased with him, narrated: The Messenger of Allah, peace and blessings be upon him, said: “If someone declares bankruptcy, and a creditor finds one of his belongings among the bankrupt’s possessions, then the owner of that property is more deserving of it than other creditors.”
On the authority of Abu Bakr bin Abdurrahman bin Haris bin Hisham, may Allah be pleased with him, it is narrated that the Messenger of Allah, peace and blessings be upon him, said:
“If someone sells a commodity and the one who bought it dies without paying for it, if the seller finds the commodity in the possession of the deceased’s estate, he has more right to take it than any other creditor.”
**Explanation:**
If a buyer dies without paying for a commodity he purchased, even if the commodity still exists, the seller is like one of the creditors. He cannot say, "I sold this commodity and I will retrieve it." This is the view of Imam Malik and Ahmad bin Hanbal. According to al-Shafi’i, just as the seller has the right to claim his property if he finds it in the estate of the bankrupt, so too does he have the same right regarding any property he finds within the inheritance of the deceased.
It is reported from Abu Bakr ibn Abdurrahman ibn Haris ibn Hisham that the meaning of the hadith narrated by Malik previously was related, but the narrator in this transmission added: “If the seller has taken a portion of the price for what he sold, then the deceased debtor who purchased it is like any other creditor [in the estate], (and he cannot take anything from his own property even if it is found).”
It is related from Abu Hurayrah, may Allah be pleased with him, that the Messenger of Allah, peace and blessings be upon him, narrated a report similar to the preceding one. In that report, the Messenger of Allah, peace and blessings be upon him, said: “If a buyer owes the seller for something he has purchased, then in the remainder of his debt, he is like other creditors. If a person dies and the seller’s goods are found with him, whether he has paid some or all of the price, then the seller is like one of the creditors. (He takes from the money distributed to the debtors proportionate to the amount of his claim, not his property).”
‘Umar ibn Halid (may Allah be pleased with him) narrated: We went to Abu Hurayra to inquire about a friend who had become bankrupt. Abu Hurayra said: I will judge amongst you according to the judgment of the Messenger of Allah (peace and blessings upon him), who said, “Whoever goes bankrupt or dies, and a creditor finds his goods being sold by the bankrupt or deceased, then that creditor has more right to his property than anyone else.”