Ruling on working in a debt purchasing company
Question

                Is it permissible for a Muslim to work in a company that specializes in purchasing overdue debts and making a profit from them? The debts could be anything from credit cards and loans to telephone bills.
Praise be to Allah.
      Buying debts 
      from their creditors for an immediate price that is lower than the value 
      of the debt comes under the heading of haraam riba-based transactions. It 
      combines riba al-fadl with riba an-nasee’ah, so it is the sale of a debt 
      for cash of a different amount with a delay in payment. Al-fadl means that 
      the debt is greater than the amount of money paid and an-nasee’ah means 
      that payment is delayed until the time the debt becomes due. 

    There is also 
    another problem that makes this transaction haraam, which is ambiguity. 
    There is no certainty that you will be able to collect the debt that is 
    owed, so it is something unknown, and the Prophet (blessings and peace of 
    Allah be upon him) forbade ambiguous transactions, as was narrated by Muslim 
    (1513) from the hadeeth of Abu Hurayrah (may Allah be pleased with him). 

    There are 
    fatwas from the scholars and resolutions of fiqh councils stating that this 
    transaction is haraam. 

    1.

    The scholars 
    of the Standing Committee for Issuing Fatwas said: 

    It is not 
    permissible to buy or sell promissory notes, currently due or deferred, for 
    less or more than the amounts stated in them, because this is regarded as 
    blatant riba, and this transaction combines riba al-fadl with riba 
    an-nasee’ah, both of which are haraam on the basis of the texts (of the 
    Qur’an and Sunnah). End quote. 

    Shaykh ‘Abd 
    al-‘Azeez ibn Baaz, Shaykh ‘Abd al-‘Azeez Aal ash-Shaykh, Shaykh ‘Abdullah 
    ibn Ghadyaan, Shaykh Saalih al-Fawzaan, Shaykh Bakr Abu Zayd 

    Fataawa 
    al-Lajnah ad-Daa’imah, 
    13/333 

    2.

    It says in the 
    resolution of the Islamic Fiqh Council belonging to the Organization of the 
    Islamic Conference issued during its seventh session: 

    Selling 
    promissory notes is not permissible according to Islam, because they lead to 
    riba an-nasee’ah, which is haraam. 

    Reducing the 
    deferred debt in order to expedite payment, whether at the request of the 
    creditor or the debtor (“reduce and pay now”) is permissible according to 
    sharee‘ah. It does not come under the heading of riba that is haraam so long 
    as it is not based on prior agreement, and so long as it is decided between 
    the creditor and debtor. If a third party gets involved, it is not 
    permissible because then it comes under the ruling on selling promissory 
    notes. End quote. 

    Resolution no. 
    66/2/7, Majallat Majma‘ al-Fiqh al-Islami, issue no. 7, 2/217. 
    Promissory notes include checks, letters of credit and the like. 

    3.

    In the 
    resolutions of the Islamic Fiqh Council of the Muslim World League, in their 
    sixteenth session, it says: 

    Secondly, 
    forms of selling debt that are not permissible include: 

    (a)

    Selling debt 
    to the debtor for a deferred price that is greater than the amount of the 
    debt, because this is a form of riba and is forbidden according to 
    sharee‘ah. This is what is called “rescheduling the debt”. 

    (b)

    Selling the 
    debt to someone other than the debtor for delayed payment of the same type 
    of wealth or otherwise, because this is a kind of selling debt for a debt, 
    which is forbidden according to sharee‘ah.

    Thirdly: some 
    contemporary applications in the area of selling debt: 

    (a)

    It is not 
    permissible to sell promissory notes, cheques, letters of credit etc., 
    because that involves selling debt to someone other than the debtor in a 
    manner that involves riba. 

    (b)

    It is not 
    permissible to deal in riba-based promissory notes, whether by issuing them, 
    dealing in them or selling them, because they involve riba-based interest. 

    (c)

    It is not 
    permissible to put debt in the form of documents or contracts and sell them 
    in a secondary market, because that comes under the heading of selling 
    promissory notes etc., which is mentioned in item (a). 

    Statement no. 
    89/1/16: 

    Based on the 
    prohibition of this transaction, it is haraam to work in those companies and 
    institutions that buy people’s debts, whether in the form of checks or 
    letters of credit, or in the form of phone bills and so on. 

    Those who go 
    against the command of Allah should beware lest some Fitnah (trials and 
    tribulations) befall them or a painful torment be inflicted on them (cf. 
    an-Noor 24:63). 

    The one who 
    wants to work in those companies should understand that whoever gives up 
    something for the sake of Allah, Allah will compensate him with something 
    better than it. 

    Allah, may He 
    be exalted, says (interpretation of the meaning):

    “And 
    whosoever fears Allaah and keeps his duty to Him, He will make a way for him 
    to get out (from every difficulty).

    3. And He 
    will provide him from (sources) he never could imagine”

    [al-Talaaq 
    65:2-3]. 

    3.

    He should 
    strive hard to find halaal work. We ask Allah, may He be exalted, to help 
    and guide him and to make him independent of means with that which He has 
    permitted so that he will have no need of that which He has forbidden. 

    And Allah 
    knows best.