Monday, 31 August 2015

What's a Prozbul

Every seven years we have a Shemitah year. MOst of the laws are agricultural and only affect those living in Israel. But one of the laws of Shemitah has an impact on us living outside of Israel too. It is that all debts are nullified. This is one of the many laws in the Torah meant to protect the poor and disadvantaged, affording them a chance to escape from eternal debt.

“At the end of seven years you will make a release. And this is the manner of the release; to release the hand of every creditor from what he lent his friend; he shall not exact from his friend or his brother, because time of the release for God has arrived.” (Devarim 15:1-2)

However, this law wasn’t great for lenders who would never be reimbursed once the Shemitah ended. The rich refused to loan money during the latter years of the seven-year cycle, refusing the poor even a temporary opportunity to make ends meet. They began to fulfil the verse “Beware, lest there be in your heart an unfaithful thought, saying, ‘The seventh year, the year of release has approached,’ and you will begrudge your needy brother and not give him, and he will cry out to God against you, and it will be a sin to you.” (Devarim 15:9)

The wealthy were concerned that the poor would always rely on the shemitah year to cancel their debts so they stopped loaning money in the latter years of the shemitah. This caused tremendous hardship on the poor and caused the wealthy to be going against God’s commandment. Hillel the Elder came up with a wonderful loophole to solve the problem. The answer was the prozbul (can be pronounced pruzbol or pruzbul).

The prozbul is a legal document signed in front of the Beit Din or in front of 2 witnesses which technically changes the status of individual private loans into loans to the public administration. Loans to the public administration are not nullified by the Shemitah year so the debts can now be collected after the Shemitah year. The Beit Din can now appoint the lender to collect the “public funds” owned. This legal loophole benefited both borrower and lender; because lenders knew their money was safe even following the Shemitah year, they were likely to loan to the poor.

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