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Monetary Torah Laws at the Close of the Shmitta Year

What is shimittat ksafim, when does it apply and what is the pruzbul?


Rabbi Eliezer Melamed

Elul 13 5775
The Shmitta year is coming to a close, and the period of ‘shmittat kesafim’ is about to begin, so now is the time to clarify the mitzvoth and ideals associated with it, and thus, understand the logic behind the enactment of the ‘pruzbul’.
The Mitzvah to Loan
It is a mitzvah from the Torah to lend someone money without interest in his time of need. This mitzvah is an offshoot of the mitzvah of tzedakah (charity), however, our Sages said that the mitzvah of loaning money is greater than tzedakah, because accepting charity degrades one’s dignity, whereas in a loan, the borrower’s honor is maintained, making it easier for him to get on his feet once again (Shabbat 63a). Another advantage of the mitzvah is that loans are given to the poor and the rich, whereas tzedakah is given only to the poor (Sukkah 49b).
Which Type of Loans did the Torah Command
The type of loans the Torah spoke about were mainly small, short-term loans, which people needed in order to buy food. As our Sages said: "If one lends money to his friend without specifying a time for repaying, he may not demand repayment for at least thirty days" (Makkot 3b). For indeed, up until modern times when people living in advanced countries learned to produce food, clothing, and other household needs in large quantities and cheaply, poverty abounded and people labored strenuously to obtain food and clothing for their families.
And although they worked hard for a living – often, people were left without money – either because they had not finished their work, had not yet been paid, or because they could not find a buyer for their goods – and in order to buy food, were forced to ask for a loan. Such people weren’t poor and unable to work - those about whom the Torah commanded us to give tzedakah; they needed a temporary loan that would enable them to get by until they were paid.
On occasion, even a person who was considered wealthy, owned a nice house, fancy clothes, and expensive furniture was left without cash to buy food for his family, and the Torah commanded us to lend him money in his time of need as well. Nevertheless, if a rich and a poor person comes to ask for a loan, the poor person takes precedence, because his situation is more needy, whereas the rich person, if necessary, could sell some of his possessions cheaply in order to survive (Bava Metzia 71a; S.A., C.M. 97:1).
Loans Today
It is important to note that as a result of the rise in living standards, many of the loans people take today are large loans mainly for investment purposes. For example, a loan to buy an apartment so as not to pay monthly rent, or to start a business that will eventually generate profits, or to pay for professional studies enabling one to earn a respectable living. Since this is an investment and not a loan, the lender is entitled to receive a percentage of the profits for his investment. Ideally, it would be appropriate for the lender and the borrower to calculate the profits created as a result of the investment and split the profits as agreed from the beginning between them. However, since such a calculation is very difficult and complex, we rely on the ‘heter iska’ [a halakhically approved way of restructuring a loan or debt so that it becomes an investment instead of a loan]("Peninei Halakha: Shevi’it" 6:3).
The Mitzvah of Shmittat Kesafim
Let’s return to the mitzvah of loans, of which the mitzvah of shmittat kesafim is an offshoot.
The Torah commands that in the end of the Shmitta year, all of Israel cancel debts that owed them by their fellow Jews, cancelling further payment. One who transgresses this, demnading repayment after Shmitta, annuls a positive mitzvah, and transgresses a negative one (Deuteronomy 15:1-3).
The goal of the mitzvah is to help the poor who are unable to pay their debts, by creating a process where, once in seven years, they could untangle themselves from the burden of debts they had incurred. The Torah set the expiration date for debts at the end of the seventh year, so they could start the new seven-year cycle free from the yoke of monetary obligations.
As the goal of the mitzvah is to help the poor, a borrower who is able to repay his debts after the Shmitta year, despite being exempt according to the letter of the law – is doing a mitzvah if he repays the loan to the lender as a gift. If he exploited the cancelling of debts and did not pay, ‘ain ruach Chachamim nocha heh’menu’ (the Rabbis disapprove), and such a person is considered ‘naval b’reshut ha’Torah’ (despicable although he remains within the parameters of halakha), and others are allowed to even pressure him to pay his debt to the lender as a gift (Mishna Shevi’it 10:9; Peninei Halakha: Shevi’it 6:2).
The Warning Not to Avoid Lending Mone to the Poor before Shmitta Year
The Torah especially warned not to avoid loaning money to needy people before the Shmitta year, as it is written: "Be very careful that you not have an irresponsible idea and say to yourself, ‘The seventh year is approaching, and it will be the Shmitta year.’ You may then look unkindly at your impoverished brother, and not give him anything. If he then complains to God about you, you will have a sin. Therefore, make every effort to give him, and do not feel bad about giving it, since God your Lord will then bless you in all your endeavors, no matter what you do" (Deuteronomy 15:9-10).
The Mitzvah to Lend Only to Trustworthy People
However, the mitzvah to loan money specifically refers to a trustworthy person; when the person asking for loan is known to be unreliable, there is no mitzvah to lend him money at any time (S.A., C.M. 97:4), because the mitzvah of loaning money is intended to help people, and not to cause disputes over repayment of the loan.
By even greater force of logic, there is no mitzvah to lend money to a person who is unreliable before the Shmitta year, because the mitzvah is to lend, and not to give as a gift. An unreliable person who asks for a loan preceding the Shmitta is essentially asking for a gift, because if he is unable to pay on time - when the Shmitta year ends, the loan becomes a gift.
Thus, the mitzvah is to lend to people who are trustworthy, who will most likely repay their debt. Notwithstanding, every loan carries a certain amount of risk – the borrower might encounter unexpected difficulties and not be able to repay his debt, and this is the type of risk we are commanded to take in order to fulfill the mitzvah of lending money to others. And especially preceding the Shmitta year, the Torah sternly warns us that we are commanded not to avoid granting loans to trustworthy people, even though if unable to repay their debts by the end of the Shmitta year, we will have to forgo them.
The Solution for High-Risk Loans
In cases where trustworthy people were forced to ask for a large loan, and the risk they would be unable to repay it was considerable, the lender would require collateral (‘mashkon’) equivalent to the sum of the loan, or require that land be mortgaged ("apotiki") to guarantee the loan. In this manner, the lender assured repayment of his loan; even at the end of the Shmitta year, such a loan does not expire, since the debt is already considered as having been paid by means of the pledge or the land.
When it was not possible to mortgage land or give a pledge for the repayment of the debt but nevertheless the borrower was trustworthy in the eyes of the lender, the lender would give the bill of debt to Beit Din, and in this manner as well, the debt does not expire at the end of Shmitta.
It is a Mitzvah from the Torah only When Yovel Applies
The mitzvah of Shmitta from the Torah applies only when the entire Jewish nation lives in the Land of Israel as required – in other words, every tribe in its inheritance, and every family on its land. Even if all of the Jewish nation lived in Israel but were mixed among themselves – i.e., some of the tribe of Binyamin resided in the inheritance of Yehudah, or vice versa, they are not considered as residing in the land as required, and the obligation of Shmitta from the Torah is annulled (Archin 32b).
The Logic in the Mitzvah
The logic of this mitzvah is obvious. When the Yovel (Jubilee year) applied, every family in Israel owned a plot of land from which they could make a living, and consequently, there were few poor people, and the risk of not repaying loans was minimal. In this type of a situation, the Torah commanded every Jew who had money to spare to give small loans for food to trustworthy people who encountered financial difficulties, and cancel the few debts of those who were unable to repay their loans by the end of the Shmitta year.
Similarly, the mitzvah to refrain from working the land in the Shmitta year from the Torah applies only when Yovel is observed, because only when all of Israel has land in the country, and they all keep the Sabbatical year, are they able to handle the great challenge of Shmitta. But when only a portion of the people own land, they are unable to bear the burden of Shmitta alone. In addition, when all of Israel does not reside in the land, chances are vacant areas are filled with non-Jews who work their fields for seven years, creating difficult competition for those who do fulfill Shmitta to withstand.
The Enactment of Our Sages
After the tribe of Reuben, Gad and half of Manasseh were exiled from their land, approximately a hundred and fifty years before the destruction of the First Temple, the mitzvah of Shmitta from the Torah was annulled (Archin 32b). Nevertheless, our Sages determined we continue fulfilling the mitzvah. Our Sages also determined that Shmitta be kept during the period of the Second Temple, in spite of the fact that Israel did not merit residing in the land as required, every tribe in its inheritance. And although under such circumstances fulfilling Shmitta was more difficult, our Sages determined we should make a greater effort to keep Shmitta, in order to safeguard the ideals of the mitzvoth, and thus, merit redemption and future fulfillment of the mitzvahfrom the Torah in its entirety.
The Enactment of Hillel the Elder
Towards the end of the Second Temple, the number of poor people requiring loans who failed to repay increased, until the loss was too great for lenders to bear – above and beyond what the Torah and our Sages had intended by means of their enactment. A situation was created where, had the rich loaned their money to all needy people as the Torah commanded, at the end of each Shmitta year when required to cancel all debts, the lenders would have gone bankrupt. This was not the Torah’s intention for the mitzvah of giving loans; for that purpose, the mitzvah of tzedakah, which has a ceiling, was intended. As our Sages said, a person should not give more than a fifth of his assets and wages to tzedakah, so that his financial stability would not be affected (Ketubot 50a).
Therefore, in order that the rich could continue lending to the poor without fear of going bankrupt at the end ofShmitta year, Hillel the Elder enacted the ‘pruzbul’, thereby expropriating unpaid loans from the law of Shmitta, enabling the rich to continue fulfilling the mitzvoth of giving loans from the Torah, and allowing the poor to make use of loans prior to the Shmitta year, as well.
God willing, next week I will clarify the mitzvah of ‘shmittat kesafim’ and the ‘pruzbul’ in practice.

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