Tithed Repayment

Question

Boruch tried to help his friend Gershon. He lent him $5000
in cash and gave him goods on credit. When the time for repayment arrived,
Gershon was unable to meet his commitments. Boruch now wishes to know whether
he can deduct the outstanding amounts from his ma’aser (charity
tithes) account. Alternatively, could he make a collection for Gershon’s
benefit and use the proceeds to repay his debts-to himself? If this is
permitted, would he be obligated to inform the donors that he is Gershon’s
creditor?


Answer

The issue of deducting defaulting debts from one’s
ma’aser
account is dealt with by the Noda Bi’Yehudah (Responsa,
Vol 2, Yoreh De’ah, No.199). He is of the opinion that such action
may only be taken if a condition was made at the time of granting the loan
(basing his ruling on one opinion in the Yerushalmi to Tractate
Gittin
). Since the loan was given on condition that it would be
converted into a charitable payment in the event of default, failure to pay
results in this being pure charity, which is deductible from the ma’aser
account. However, if no such precondition was made, this option is not
available. Just imagine that all bad debts were ma’aser deductible,
says the Noda Bi’Yehudah. The wealthy could exempt themselves from
helping the poor, arguing that all their tithes had been spent on repaying
bad debts! Those who were genuinely needy would then find that they had no
means of support. The original purpose of tithing one’s income was to
provide for charitable payments to the poor and not to remove their debts.
This aim must be upheld.

However, it is sometimes possible to deduct a bad debt
from one’s ma’aser account without previously having made a
condition. Let us imagine that the lender had previously been accustomed to
make monthly charitable payments to the poor borrower. He had lent the poor
man money, which was not repaid. He is entitled to deduct the outstanding
amount from the monthly payments to this person. The fact that he took this
action does not cause other poor people a loss. At the same time, this
particular poor borrower is receiving the same amount from his benefactor,
albeit in the form of forgiving a loan., It would additionally be necessary
for the lender to receive the borrower’s sanction for this form of
settlement.

Such permission is not required in the event of the
lender making a precondition. The Remo (Yoreh Deah 257:5)
writes clearly that if one took tithe money which one had intended to give
to a poor person at a later date and lent it to him instead, this sum may be
deducted from the ma’aser account in the event of default in
repayment. This is considered as if he had actually given the sum to the
poor person (Shach, Note 2).

The second suggestion was to make a collection for Gershon’s benefit and
use the proceeds to pay off his debts. This is permitted, even though the
person raising the funds happens to be Gershon’s creditor, who stands to
gain from the donations. The Shulchan Oruch (Ibid. 253:12) rules that
if a needy person received charitable donations, his creditors have no right
to seize this money in payment of debts outstanding to them. The Remo
qualifies this ruling, stating that if the charity collectors had stated
that the person on whose behalf they were making the collection was in debt,
repaying those debts becomes one of the functions of the collection. In this
event, there would be no need to inform the donors that the funds were being
used for repayment of debts – even if the collector happens to be the
creditor as well. They have given money for this poor person’s needs, which
include repayment of his debts. Nobody wishes to have the reputation of
being one who fails to repay loans.