THE JERUSALEM INSTITUTE OF JEWISH LAW 
Rabbi Emanuel Quint, Dean 

Lesson # 84 • Payment of the debt by money or cash equivalent

Reuven owes Shimon $100. Either he borrowed it from Shimon or his car ran over Shimon or he painted Shimon’s house and Shimon owes him the money. Ordinarily debts are paid in cash, unless stipulated otherwise, when the obligation is about to be incurred. Thus the parties can stipulate that Reuven will clean Shimon’s radio store and Shimon will pay Reuven by giving him two radios at wholesale cost. What of the situation where the parties did not stipulate how he debt shall be paid and now Reuven, the debtor, owes Shimon, the creditor, $100?

The debtor is about to repay the creditor the $100 that is due. The debtor has $100 in money (cash or cash in a bank on which he can write a check for $100), personal property (such as watches worth $100), and land worth $100. The debtor may want to pay the debt in cash or by writing a check. Or the debtor, being in the watch business, may want to pay the debt in watches. Or else he has no need for the land and would like to pay the debt by transferring the land to the creditor. Does the debtor have a choice? Does the creditor have a choice to state that he wants to be paid in watches or in land rather than in money? 

In halachah. in many instances the delivery of personal property or realty to a person is a cash equivalent. Thus, at a wedding ceremony the groom betroths the bride with a ring, which is being given to her as the equivalent of cash.

No greater catastrophe, than the Holocaust has ever befallen a people due to the conduct of Gentiles, while most of the other Gentiles of the world stood by in silence. Unfortunately, the Holocaust did very little to correct the attitude of such Gentiles toward Jews. Thus there is a natural fear of the Gentiles who could and often do punish Jews without provocation. Thus. if a debtor states that he does have money, but it belongs to a Gentile and he is holding it for him, or that he owes it to the Gentile, and if he were to pay the money to his Jewish creditor, the Gentile creditor might have the Jew punished or imprisoned, his statement is taken seriously. The halachah makes mention of this fear and how it affects the collection procedure. The accepted and anticipated practice is that debts will be repaid in money. 

If the debtor has money adequate to pay the entire debt or part of it to the creditor, he must pay in cash as much as he has toward the repayment of the debt. He cannot decide, without the consent of the creditor, that he will pay by the delivery of personal property or real estate (cash equivalent) to the creditor. If the debtor has money and desires to pay in money, the creditor may not state that he desires to be paid in cash equivalent. If, Beth Din determines that the debtor who claims that he has no money has money and is lying when he states that he has no money, Beth Din may compel him to pay in money. The creditor may have a ban proclaimed against those persons who, although they have cash, make payment to creditors in cash equivalent. The debtor is not required to pay the creditor in money if it will cause danger to the debtor, as where he owes the same amount of money to a strong-armed person as he does to the creditor. He may allege that he must use the money to make the payment to the strong-armed person and pay the creditor in cash equivalent. 

A debtor who claims that he has no money but has personal property or real estate may pay in cash equivalent and need not sell any of his assets to pay in money. He is not compelled to take an oath that he has no money.

If the debt arose from a sale of merchandise on credit, then the buyer/debtor must pay the seller/creditor in cash, since it is anticipated that all sales are for cash. The debtor will be required to sell assets to pay in money. 

A debtor who is reputed to be wealthy is compelled to pay in money, although he pleads that the money in his possession is not his. If a debtor has cash equivalent and he is seen as in possession of money, but he claims that the money does not belong to him, his allegation is believed without the necessity of his taking an oath to that effect, and he may pay in cash equivalent. If the debtor pleads that the money in his possession belongs to a Gentile, and the creditor suspects that it belongs to the debtor, the creditor may ask that a ban be proclaimed against all those who know if the debtor has any money to come to Beth Din and testify. If it is known or determined that the debtor did not tell the truth regarding the money in his possession, then he is no longer believed in the current litigation regarding the debt, and he is compelled to make payment in money even if it entails his selling personal property or real estate to be able to make the money payment to the creditor. 

If it is known that the Gentile has a claim on the assets of the debtor and the creditor is afraid to take real estate and cash equivalent because of that claim, the debtor has the responsibility to sell the realty and to pay the creditor. This applies to all situations where the creditor will suffer a loss by receiving cash equivalent. and the debtor must sell his assets and pay in money. 

All that has been said above is the status of the halachah as it has developed over 35 centuries. I submit that at the present time, when barter of goods and/or services is very limited, all repayments should be made in money. In the case of the levy on the cash equivalent of the debtor, the assets will be turned into money at the sale. 

When the debtor has no money, but does have real estate and personal property, the payment must be in personal property if either party so desires. The debtor then has the choice to select the personal property to be given as the cash equivalent, and the creditor has no choice in which personal property is to be given to him. If the debtor has only cash equivalent, the creditor may insist that he does not want to be paid until the debtor will have money. 

All of the personal property of the debtor is sold until sufficient proceeds of the sales are realized to pay the creditor. After all of the personal property is sold and there is still a deficiency to be paid to the creditor, the real estate of the debtor is sold. When the real estate is sold, it is sold subject to any prior liens on the real estate.

The legal field of collecting debts is a very large field; the foregoing is only a tiny view to acquaint the reader with the first hurdle to be overcome in collecting a debt.

The subject matter of this lesson is more fully discussed in Vol. IV, Ch.101 of A Restatement of Rabbinic Civil Law by E. Quint, published by Jason Aronson, Inc. and on sale at local Judaica bookstores. 

Questions to quint@inter.net.il