ABSTRACT
Islamic moral economic system is based on justice, ihsan, and silah-i-rahm; it creates an environment in which everyone cares for each other. This chapter discusses household debt. According to the teachings of the Qur’an and Sunnah, debt and risk cannot be forbidden and cannot be considered as vices in Islamic society. It is also permitted that a Muslim can enter the secular debt market but must follow the restrictions imposed by Islamic jurisprudence. At present, a number of households play a significant role in the debt market, i.e. either as lenders or borrowers. It is a well-known practice in the conventional debt market that debt relationships are generally based on greed. The most omniscient reason is that most of the times, the debtor overestimates his ability to repay, which is not usually realized or a factor of lie exists in relationships.
