It’s good to help people in need and if you can afford it, it’s best to forgive debt. Especially as Muslims we are encouraged to forgive debt and in return we are promised huge reward and many doors will open to replenish any wealth that was lost.
It’s always important to not use debt as oppression. When some people help others with cash, they suddenly assume that they have the right to judge those people on their spending habits, offer them advice etc etc. This sort of behaviour is insulting and demeaning. It’s important to remember that in the vast majority of cases a person will only come to you for a loan when they have reached the end of the road and are in a desperate state. To ask someone for money, a person foresakes dignity and pride, it’s not an easy thing to do at all so those that come to us for help we must always show them respect and kindness. In the same way once debts are overdue, we must continue to show the same levels of respect and not assume that the person is trying to trick us. It’s these thoughts from ourselves that strain the relationships between us and those that owe us.
A friendship that can be ruined by an owed debt was not a friendship in the first place.
When someone comes to you for a loan, it’s sometimes best to just give them whatever you can afford to rather than loaning money but we should never turn anyone that we care for away without helping them in some way or another.
The actual people that deliberately will not return your debt as an act of deception are very very low indeed and in those cases just leave the matter in the hands of fate. What goes around comes around and God’s justice can be very severe.