Lesson # 57 - Prosbul 

This is the beginning of the shemitah year and so much has been said about the produce of the seventh year. There is another aspect of the shemitah year that has not been much explored yet, the cancellation of debts. Although there are some who write a prosbul just before the shemitah year and then towards the end of the shemitah year, the overwhelming number of authorities hold that it need be made only at the end of the shemitah year. 

There is no concept of bankruptcy in halachah. Thus an indebtedness is never cancelled just because the debtor does not have the ability to pay. According to Torah law, however, all debts (except as hereinafter specified) were canceled at the end of the shemitah year. It was then considered that people might hesitate to lend money close to the shemitah year because the repayment of the loan would be cancelled. Therefore Hillel instituted the prosbul, pursuant to which the loans would not be cancelled. So that people would not be reluctant to make loans by the reason of the approach of shemitah. 

On the subject of refraining of lending money before the shemitah year, Rambam writes (Laws of the Sabbatical Year and the Year of the Jubilee, chapter 9, law 30 “If a person refrains from lending money before the shemitah year because he fears that there may be delay in repaying the loan and in the meantime the shemitah will intervene and cancel the loan, he transgresses a negative commandment, as it is written “Beware that there be not a base thought in your heart” [Deuteronomy 15:9]. This is a very serious transgression for the Torah has warned against it with a double injunction…The Torah is very particular regarding this evil thought and calls it a base thought.”

Prosbul is a device enacted by Hillel in the first century B.C.E. to encourage loans and commerce by enabling the lender to enforce collection of loans even after the shemitah year. The Talmud discusses the necessity for the prosbul since the laws of cancellation of debts was no longer practiced according to Torah law. (See Gittin 36a)

The cancellation of debts a the end of the shemitah year in modern times is of Rabbinic origin and is applicable in all places. Debts are cancelled at the last moment of the shemitah year, that is on the last day of Elul, moments before Rosh haShana of the first year after the prior shemitah year. Thus if a loan is made this year, a shemitah year, it may be collected or a prosbul written until the last moment of this year. 

In general, shemitah cancels all debts, whether oral or evidenced by a writing even if he writing contains a clause placing a lien on the borrower’s real estate as security for the loan. 

There are certain types of debts that are not cancelable by shemitah. If a lender loans money to a borrower on condition that shemitah shall not cancel the debt, the debt is nevertheless cancelled because the lender cannot cancel a law of the Torah or a Rabbinic decree given the strength of a Torah law. However, of the parties stipulate that the borower will not raise the passing of the shemitah year as a defense to the lawsuit brought by the lender on the loan, the stipulation is valid, and the loan is not cancelled. 
If partners divide up property or their profits and one of the partners receives more than his share, shemitah does not cancel his obligation to make an even division, since shemitah cancels only loans, and not investments or property deposited with another person. 

If the writing made by the parties refers to the loan as a deposit, the loan is not cancelled. Stipulations regarding money are generally valid, and the borrower had the right to frame the note of indebtedness in a manner that it would not be cancelled by shemitah. However, if the general practice in the community is to refer to loans as deposits so as not to have the loans cancelled by shemitah, and an instrument entered into between the parties does not so characterize the loan, then shemitah will cancel the loan. Ordinarily, if there is a practice in a community to write notes in a certain manner and a note does not conform, then it is held that there was an error on the part of the scribe who drafted the note. In this case, however, the omission can be attributed to the lender’s wanting to comply with the laws of shemitah.

If a loan was made for a term that would run beyond the shemitah year, shemitah does not cancel the loan, since the lender could not have sued for repayment during the shemitah year. Since the lender could not have demanded payment during the shemitah year, he is not in violation of the verse that states “he shall not exact payment during the shemitah year”. 
Loans that are collateralized by the lender taking the borrower’s personal property into his possession as security are not cancelled by shemitah. There is an opinion that the amount of the loan not cancelled is only up to the value of the security, and the balance is cancelled. While the security is held by the lender, it belongs to him. The reason is that since the lender holds security he does not have to “exact payment” in violation of Deuteronomy 15:2. The other opinion holds that if collateral security has been taken, even the amount of the loan that exceeds the value of the security is not cancelled. The reasoning of this opinion is that since the lender originally took the lesser collateral as security for the entire loan, it is the equivalent of having security for the entire loan. 

Shemitah does not cancel the amount owed for merchandise purchased on credit unless the credit is converted into a loan. A credit is converted into a loan from the time payment is due. A contrary opinion holds that the credit is converted into a loan from the time that total running account due from the customer is entered upon the merchant’s account books as one total sum. There may be many makolet owners who may be involved in this type of operation. Tell your makolet dealer to write a prosbul next Elul. 

Wages earned by a worker are not cancelled by shemitah unless the moneys due were converted into a loan. 

If a man divorces his wife prior to the shemitah year, her kethubah is not cancelled, since a kethubah is not a loan. However, if it has been converted into a loan it is cancelled by shemitah. The kethubah falls under the laws of shemitah from the moment the wife takes part payment or converts the kethubah into a loan, as for example she has the balance drawn into a note if indebtedness.

IYH, next lesson will discuss the prosbul itself, the necessity of the debtor to own land, the credibility of the lender, and the status of the loan after shemitah.

The subject matter of this lesson is more fully discussed in Volume 2, Chapter 67 of A Restatement of Rabbinic Civil Law by E. Quint and on sale at local Judaica bookstores.