by Rabbi Yona Reiss Av Beth Din, cRc 

Originally published in the cRc Monthly Shemittah Newsletter, Volume 5, Teves 5782 | December 2021

One of the laws of the shemittah year that is applicable even outside of Israel is shemittas kesafim, the cancellation of loans (see Devorim 15:1-2). Most halakhic authorities rule like the opinion of Rebbe (Gittin 36a), who derives from a juxtaposition of similar phrases in the Torah (shemittah and sha-mot) that shemittas kesafim is only a Torah law during the time that yovel (the Jubilee year) is in effect. Therefore, since nowadays we do not observe yovel (see Erchin 32a), shemittas kesafim is only observed on a rabbinic level in order that we not forsake the institution of Shemittah. 

However, during the days of the Tenaim, Hillel observed (Gittin ibid.) that the observance of shemittas kesafim was leading to the violation of a different Torah commandment, namely that lenders are not allowed to refrain from extending loans towards the end of the Shemittah cycle out of fear that their loans would be canceled. Since lenders were in fact declining to extend loans based on this fear, Hillel enacted a special rabbinic device known as a “Pruzbul” which enables lenders to collect their loans even after the Shemittah year. 

The mechanism of Pruzbul is that the lenders assign their loans to a bet din, in which case the law of cancellation of loans is no longer applicable; either because the loans are already considered to be collected by the bet din (see Aruch Hashulchan CM 67:10) or because the prohibition of collecting loans following the Shemittah year only applies to loans between a person and “achi’kha” – one’s “fellow,” and bet din is not in that category (Sifrei, Re’eh, Piska 113). It is modeled after the law recorded in the Mishna (Shvi’is 10:2) that a lender may avoid the cancellation of loans by handing over his or her loan documents to the bet din. Hillel’s innovation was that Pruzbul works even though the lender does not physically hand over the loan documents, and even applies to loans that are purely verbal in nature (see Shmitas Kesafim u’Pruzbul, p. 40). 

According to most commentators, the institution of Pruzbul only works on a rabbinic level, and therefore was only enacted by Hillel for a time such as nowadays when the cancellation of loans is only rabbinic in nature (see, e.g., Rambam, Shmittah v’Yovel 9:16). However, according to one opinion in the Rishonim, the institution of Pruzbul can work even when the law of cancellation of loans is mandated by the Torah, such as when yovel is observed (see Ra’avad ad locum). The dispute may hinge on the question (see Chazon Ovadiah, Laws of Pruzbul, pp. 45– 46) as to whether the Rabbis have the power, through the mechanism of Hefker Beth Din Hefker, only to cause a person to relinquish his or her money (such as through enacting shemittas kesafim nowadays, which removes the lender’s entitlement to the borrower’s money) or even to transfer one person’s money to another person (in this case, resulting in the borrower, whose loan would otherwise have been canceled, being obligated to relinquish his or her money and give it to the lender). 

It may be useful to break down the practical applications of these laws to the following questions: (a) when; (b) which; (c) who; (d) why; (e) where; (f) what; and (g) how. 

(A) When: A person’s loans become canceled at the conclusion of the Shemittah year (CM 67:30). Therefore, it is advisable for lenders to perform a Pruzbul as late as possible into the Shemittah year, such as on erev Rosh Hashanah, in order to cover as many loans as possible. Some individuals have a practice (recorded by the Ben Ish Chai) of extending one small loan after executing a Pruzbul in order to have shemittas kesafim apply to at least one loan that they have extended. The Rosh (Gittin, chapter 4, siman 20) was of the opinion that one should execute a Pruzbul prior to the beginning of the Shemittah year because he held that while the loans only become canceled at the end of the year, the prohibition of collecting a loan goes into effect at the beginning of the year. However, this opinion has not become generally accepted. 

(B) Which: Any loan which has a due date prior to the end of the Shemittah year becomes canceled in the absence of a Pruzbul. Included in this category are outstanding credit obligations of customers or unpaid wages when the due date has been extended in a fashion that would convert them into a loan (CM 67:14-15). However, if a bet din issued a written decision requiring money to be paid, this type of obligation would not be subject to cancellation since it is considered to be collected by the bet din (CM 67:8). If the due date of a loan is not until after the end of the Shemittah year, it would not be canceled (CM 67:10). 

(C) Who: Any individual who has extended a loan needs to execute a Pruzbul for the loan not to be canceled at the end of the Shemittah year. This includes both husbands and wives, since a wife sometimes extends loans with her own assets (Shemittas Kesafim u’Pruzbul, p. 53-54). It is especially important for people in business who may have made very substantial loans to remember to execute a Pruzbul, because otherwise they will likely not be able to collect their loans in a bet din proceeding. Nevertheless, any individual who claims that he executed a Pruzbul, but lost any record of it, is believed (CM 67:33). However, according to the rule of the Gemora, a Pruzbul is only effective if the borrower owns (even through a rental) or has a lien upon real estate (Gittin 37a). Thus, lenders will sometimes transfer a small amount of real estate to the borrowers through a third party (in a mechanism known as “zachin”) to make sure that the borrowers satisfy this criterion (CM 67:22). It is not customary for Batei Din to perform such a transfer, since nowadays virtually every borrower either owns, rents, or has a lien on real estate (e.g., through having money in the bank, since the bank owns real estate that it can sell to satisfy its obligations). According to the Chasam Sofer (5:50), if a borrower owns movable property, it is sufficient to justify a Pruzbul, since it is common for lenders nowadays to rely upon movable property in the same fashion that they used to rely upon real estate during the days of the Tenaim and Amoraim. 

(D) Why: It is prudent and proper for everyone to execute a Pruzbul because (a) it helps prevent the possibility of one being reluctant beforehand to extend a loan and thus violate a Torah prohibition; (b) it ensures that people be able to collect any debt owed to them, even with respect to outstanding obligations from other parties that did not start off as a loan but would be viewed as having been converted into a loan by dint of extensions granted to the debtor; and (c) it prevents lenders from violating the prohibition of collecting debt that had been canceled by the Shemittah year. Although the Rosh cites those communities that were not meticulous about performing a Pruzbul, and the lenders collected their debts anyway, he decries the practice (see Tur CM 67) and suggests that in some communities there may have been a built-in condition to every loan that the borrower agreed from the outset to pay back the money (despite the lack of obligation following the cancellation of the loan) which would be a binding condition (see Makos 3b, Rambam, Shmittah v’Yovel 9:10). However, it is not our practice in our communities to make such a condition. 

(E) Where: Shemittas kesafim applies both in Israel and outside of Israel, and a Pruzbul should therefore be executed regardless of location. A Pruzbul is supposed to be executed in writing in front of a bet din (Gittin 36b). There is a passage in the Talmud Yerushalmi (Shvi’is, ch. 10) that indicates that it can be executed “even if they are in Rome.” While the Ran (Gittin 36a) understands this to mean that the Pruzbul works even if the loan documents are in Rome, the Mordechai (Gittin para. 380) goes further to say that it means that one can execute the Pruzbul in the presence of witnesses even if the dayanim (members of the bet din) are in Rome. The Rema (CM 67:20) rules in favor of this opinion, although the Pruzbul needs to specify the names of the dayanim. Many poskim also allow a person to designate an agent who will execute the Pruzbul in front of the bet din on that person’s behalf (see extensive discussion about this issue in Chazon Ovadiah, pp. 65–75). 

(F) What: The Gemora (Gittin 36a) records the standard text of the Pruzbul form. If the Pruzbul is executed in front of a bet din, the lender says before them: “I submit to you judges in this place all of the loans that I have outstanding, and I therefore may collect these loans at any time that I desire.” The bet din then signs the form attesting to the fact that the lender made this statement in their presence. If the lender executes the Pruzbul in front of witnesses, the lender says: “you are my witnesses that I am submitting all of the loans that I have outstanding to the bet din consisting of [names of dayanim], and I therefore may collect them at any time that I desire.” The witnesses then sign the form, and it is sent to the bet din. The Gemora (Gittin 37a) records that talmudic scholars may execute a Pruzbul verbally, and the Rema (CM 67:20) rules that this dispensation may be relied upon by any person if necessary. The Shulchan Aruch rules that the bet din should be a “Beth Din Chashuv,” meaning an important and recognized bet din, while the Rema rules that any three knowledgeable individuals can convene a bet din for purposes of a Pruzbul (CM 67:18). 

(G) How: The Chicago Rabbinical Council sets up different bet din panels under its auspices in multiple locations towards the end of the Shemittah year so that a bet din will be readily available for all those who wish to execute a Pruzbul. The bet din also prepares forms that parties can execute in front of witnesses, as well as forms that can be executed by an agent (such as a shul Rabbi) who is appointed by members of his community to execute a Pruzbul on their behalf. 

The Mishna (Shvi’is 10:9) records that even if a lender’s loans are canceled at the end of the Shemittah year because the lender never executed a Pruzbul or if there was no option of Pruzbul (at least according to some commentaries) because it was a time when the yovel was in effect and the cancellation of loans was operative on a Torah level, it is still considered proper ethical behavior for the borrower to pay back the obligation. Since the loan has been canceled, the lender should say “I hereby cancel your loan,” to which the borrower should then respond, “nonetheless I want to pay you anyway.” Although this procedure seems relatively straightforward, the Gemora (Gittin 37b) tells a story of one case where the borrower forgot the “nonetheless” line and walked away without paying, leading to bad feelings. Therefore, the simplest solution remains the execution of the Pruzbul form, which ensures that the Shemittah laws are not forgotten, and at the same time spurs lenders to continue to extend loans during the Shemittah year. 

Ultimately, shemittas kesafim reminds us of the important core principle that all our finances are in the hands of Hashem (Chinuch, Mitzvah 477), and Pruzbul reminds us of the significance of taking steps to ensure that we respect the financial needs of others. In this sense, the Gemora (Gittin 36b-37a) tells us that the Pruzbul is a good “pruz” (remedy) for both the “bul” people (the rich lenders) and the “buz” people (the needier borrowers). Thus, observance of these important Shemittah laws elevate us both in the spheres of bein adam l’makom and bein adam l’chaveiro.