Question
About ten years ago I extended a non-interest-bearing loan to a fellow frum Jew who had a successful business. According to the terms of the loan agreement, he was supposed to pay me back at the end of two years and he gave me post-dated checks to cover his debt. While his business continued being successful, he borrowed money which he used to invest. His investments went sour and he could not cover his debts and several of his large creditors took him to secular court where he sought and received bankruptcy protection. As I had no hope to get anything at the time if I would not notify the court of his debt, I informed them of his debt to me and like all of his creditors received thirty percent of what he owed me. I didn't sign any document to free him of the remainder of his debt but since that is how the case was settled, I can't collect from him under secular law. After he was freed of all of his debts he started anew and Boruch Hashem once again has money. Can I take him to beis din in order to collect the remainder of his debt or is he free from paying since under secular law he no longer owes me any money?
Answer
In the previous article we considered two possible reasons why, based on Jewish law, a bankrupt entity might be free from repaying. We considered first whether, based on Jewish law, a bankrupt entity is free from repaying. We saw that in Torah law there is no concept of bankruptcy protection. Second, we considered whether, since the bankruptcy law is the law of the land, perhaps the Torah law of dino demalchoso dino frees the borrower from repaying his debts. However, we saw that the consensus of poskim, and perhaps all poskim agree, that ddd does not apply to bankruptcy law.
A third possibility is that perhaps custom overrides the law. While custom does not override Torah prohibitions in non-monetary laws since they are absolute, in monetary law where the law is contingent upon people's agreement, the laws can be overridden by custom, as the Yerushalmi (BM 7,1) writes, "From here we see that the custom overrides the law."
According to many (e.g., P'nei Moshe in his commentary to the Yerushalmi), the source of the Yerushalmi's statement is the law concerning the length of the work day. While the Gemara derives from a pasuk in Tehillim that the work day begins at dawn and ends at dusk, nevertheless, the Mishna (BM 83A) rules that one who hires an employee and does not stipulate the hours that his employee is required to work can only require him to work as many hours as is customary in that place, even though the pasuk states that the workday is from dawn to dusk.
Another example of a custom that overrides law is the rule that one who borrows money is entitled to hold the money for thirty days before the lender can demand repayment of the loan. The Gemara (Makos 3B) derives this right from a pasuk. Nevertheless, many poskim including the Magen Avrohom (307, 14) rule that since people no longer grant their borrowers a thirty-day reprieve, a lender who did not explicitly grant his borrower thirty days may demand the return of his loan before thirty days elapse.
In cases like these two examples, where the Torah's stance itself is basically a statement of custom and not a law, there is a dispute whether in order for a custom to be able to override the Torah's stance it is necessary for an authority to undo the Torah's position. The stance of the Ohr Zorua (BM 279-282) is that even in these types of cases it is necessary for an authority to undo the Torah's position. However, the predominant position of the poskim (e.g., Ramban (Kesuvos 66A)) is that in these cases it is not necessary for an authority to approve a change in the law since the Torah law was never intended to be more than the default practice in case there is no custom. Therefore, in these types of cases any custom, even if it is just the practice of the common folk, has the weight of a custom and is decisive.
A second type of practice that is discussed by the Rishonim concerns husbands whose wives passed away after they were betrothed (eirusin) and before the marriage was consummated. The Gemara (BB 144B) rules that where it was customary for the bride's family to return the money or ring that was given in order to affect the betrothal, the family must return the money or ring even though this was not stipulated at the time of the betrothal and is not required by the Torah. The Gemara says that this law only applies in case the bride passed away. If the husband passed away, his wife is not required to return what she received from her husband at the time of betrothal.
The Ramban asks that since the entire rule that in case the wife dies the family must return what she received at the betrothal is based on custom, why can't there be a custom that when the husband dies that she must also return what she received from her husband?
In response, the Ramban postulates that not every custom is able to override monetary laws. Only a custom that was enacted by the people or their representatives has the ability to undo a Torah law. However, if the custom was not enacted but merely was the way the common people acted, the custom does not prevail.
Therefore, even if there were a custom to return the present that was given at the time of betrothal in case the husband died, since it is against the law that allows the wife to keep the present and was not enacted by the authorities, the wife will not need to return the present. However, if the wife died, since it is not totally against the law, custom prevails even if it was not enacted by the authorities and is not based on the law. Many poskim including the Rif (res. 13), Rosh (res. 55, 9), Ritvo (BB 145A) agree with the approach of the Ramban.
The Rashbo (BB 144B) disagrees with the Ramban and maintains that even a custom that is against the law is valid even if it was not formally enacted by the people or their representatives. However, the Rashbo (res 2, 268) also maintains that not every practice can uproot the law but only if it is common and well-known. The reason a well-known custom is binding is because then it is as if all the parties stipulated that their agreement is goiverned by custom.
In the case of bankruptcy, if there were a custom to absolve people of their debts it would clearly run counter to Torah law as we saw in the previous article. Therefore, according to the Ramban et al it would require an enactment of the authorities, acting in accordance with the Torah, which has not occurred. Even according to the Rashbo, since bankruptcy is not a common practice it is not considered a custom that is able to uproot Torah law.
Furthermore, bankruptcy is not really a custom. Rather, secular law allows a debtor to turn to and receive bankruptcy protection from secular court. However, Jews are prohibited from turning to secular court, and since the prohibition for Jews to go to secular court is not a monetary law, custom could never override Torah law in this case. Hence, custom cannot allow Jews to go to secular court in order to invoke the bankruptcy law.
One more possibility to free your debtor is that perhaps, when your debtor went bankrupt, you despaired of recovering the debt, a state that is known as ye'ush. We find in the Gemara the concept of ye'ush with regard to lost and stolen objects. For example, if a person who lost an object gives up hope of ever recovering the object, whoever finds it subsequently, may keep it.
The Maharik (res 3) was asked to rule in a dispute between the community and a few once-wealthy members of the community. These individuals lent money to the gentile ruler on condition that he repay the debt by reducing the tax debt that the community owed him. However, he continued charging taxes as always. Finally, the ruler was killed, and when his son took over, he repaid the loan by reducing the community's debt, as his father had promised. Those who lent the money to the gentile argued that since the money was given as payment for the loan that they had extended to the late ruler, they were entitled to a reduction in their communal dues. The community argued that since they had despaired earlier from ever having their debt repaid, they were not entitled to the money.
The Maharik, whose decision is cited by the Ramo (163, 3) without dispute, ruled in favor of the community. He compared this to one whose object was lost in a flood where the Gemara (BM 24B) rules that whoever finds the lost object may keep it since its owner despaired from ever recovering his lost object.
However, the Chacham Tzvi (notes on the Taz CM 163, 3) disagreed, claiming that this case is comparable to one who despairs of recovering his lost object only after it was found by someone. There ye'ush is not effective since the one who found it already must return the lost object to its owner and he is considered to be holding the object for its owner. Similarly concerning a loan, since the borrower was already obligated to repay before the lender gave up home of recovering his loan, his obligation remains after the lender gave up hope.
Later poskim are in disagreement on this issue. For example, the Ketsos (163, 1) agreed with the Maharik and the Nesivos agreed with the Chacham Tzvi. Therefore, the issue is undecided and has the status of a sfeiko dedino-an undecided dispute where one cannot force one who is holding the money to surrender it. Therefore, if at one time you gave up hope of ever recovering your debt you cannot force your debtor to repay you.
In conclusion: In Torah law, one who cannot pay his debts is not free from ever repaying his debts. Moreover, even there are circumstances in which it is customary to free him from repaying, it is not binding in Torah law. However, if a creditor despaired from ever collecting a debt, he cannot force his debtor to repay.
