Can I work in a debt collection agency?

Question

Are we allowed to work in a debt collection agency?

Answer

بسم الله الرحمن الرحيم

الجواب حامدا ومصليا ومسلما

A debt collection agency is a business that pursues payments or debts on behalf of creditors, which are owed by individuals or businesses. Such agencies collect debts and acquire profit through one of the following methods:

 

  1. By charging the creditor a fixed fee for each debt.
  2. By charging a percentage of the total amount which will be collected.
  3. By purchasing the debt from creditors for a fraction of the debt and thereafter pursuing the debtor for the full balance, which may also include interest.

Out of the above three methods of income, the first one is permissible  and the latter two are not.

The first one is permissible because the fee is a fixed amount.

In the second method, the fee which is being charged is unknown, because the agency may or may not be able to collect the full debt. Therefore, the transaction is invalid.

In the third method, a debt is being sold to a third party, which in itself is impermissible. Also, buying the debt for less than its actual value amounts to interest, which is strictly prohibited in the Qur’an. Therefore, the third method would be invalid as well. Consider the following verses of the Qur’an:

Allah Ta’ala mentions in the Quran:

الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا

Those who take ribā (usury or interest) will not stand but as stands the one whom the demon has driven crazy by his touch. That is because they have said: “Sale is like ribā”, while Allah has permitted sale, and prohibited ribā. (Verse: 2:275)

 يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِن كُنتُم مُّؤْمِنِينَ (278) فَإِن لَّمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِّنَ اللَّهِ وَرَسُولِهِ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ 

O you who believe, fear Allah and give up what still remains of ribā, if you are believers. But if you do not (give it up), then listen to the declaration of war from Allah and His Messenger. However, If you repent, yours is your principal. You should not wrong (others), nor be wronged. (Verse: 2:278,279)

It is permissible to work at a debt collection agency provided that their method of income is only the first one mentioned above.

Before applying for any job, it should be ascertained that the income of the employer is earned through a lawful means. If one’s current employers have unlawful means of income, then it is necessary to seek a job which complies with shari’a and leave the current one, even if it means seeking a job with a lower wage. Until finding it, one should continuously seek forgiveness from Allah subhanahu wa ta’ala.

والله اعلم

 

Allah Knows best.

 

Approved by: Mufti Husain Ahmad Madani