First: Repaying debts is a religious obligation for those who are financially able. Allāh says: “And fulfill the covenant of Allāh when you have made a covenant.” [An-Naḥl 16:91], and “O you who have believed, fulfill [all] contracts.” [Al-Mā᾽idah 5:1].

The Prophet (peace and blessings be upon him) also said, as narrated by Abū Dharr: “I was with the Prophet (peace and blessings be upon him) when he saw ᾽Uḥud and said, ‘I would not like it to be turned into gold for me, to remain with me more than three days, except for a dinar which I would keep for debt.'” [Al-Bukhārī and Muslim].

The Prophet (peace and blessings be upon him) also forbade delaying the repayment of debts when one is able to pay back. He said, as narrated by Abū Hurayrah: “Delaying repayment by a rich person is injustice.” [Al-Bukhārī and Muslim].

Here, “rich” refers to anyone capable of repaying, not necessarily wealthy, and it means delaying the repayment of a due debt without a valid reason. A “rich” person is anyone who can pay back, even if they are otherwise poor.

This matter is not only about this life; debt also has effects in the afterlife. In a ḥadīth narrated by Abū Hurayrah, the Prophet (peace and blessings be upon him) said: “The soul of the believer is held back by his debt until it is settled.” [᾽Aḥmad and Al-Tirmidhī. The latter graded its chain of narrations as ḥasan (good)].

Thus, repaying debt promptly is obligatory for anyone who is financially capable, and this is the view of the majority of scholars from the Ḥanafī, Shāfi῾ī, and Ḥanbalī schools. The Mālikīs, along with Ibn Taymiyyah, held that the obligation to repay debt is tied to the agreed-upon due date and becomes mandatory only when the debt is due. Nonetheless, it remains obligatory in both cases.

Second: Repaying debt can be done with any money that the debtor has, whether that money is ḥalāl (lawful) or ḥarām (unlawful). The lawfulness or unlawfulness pertains to the individual, not to the debt itself. Money in its essence is neither ḥalāl nor ḥarām; it is the method by which it was earned that determines its lawfulness. Debt is related to the money, not to the method of earning it.

If someone receives interest-based money, the sin of earning it rests on them, but it does not invalidate their transactions with others using this money, nor does it nullify contracts. The interest-based money is unlawful for the person who earned it, but it is lawful for others, as long as the transaction between them is lawful.

So, if a person uses interest-based money to repay a debt, purchase goods, or donate to an organization, these transactions are lawful for the other parties involved. However, the one who earned the interest bears the sin.

This is a general rule, and it also applies to salaries from jobs that involve interest-based transactions, such as salaries from governments or states that deal with interest, or retirement funds. These are considered lawful for their recipients, as the method of earning them are lawful in origin, even if the source of the funds may be questionable.

It is also worth mentioning that the rulings on ribā (usury) in non-Muslim lands differ in some aspects from those in Muslim lands, as we have explained before.