I live in the UK since 1997, since that time I have studying two years for language and three for my PhD. My banks offered me two loans and some credit cards (borrowing money with interest), and I took the money and I spent it on my tuition fees and living for the last three years. Now I cannot pay, as I could not find a job after I finished my degree. The banks have given me two choices: pay as much I can on monthly basis and the interest still adding to the total. The second option the banks gave me is: bankrupting me and no need to pay anything back. My question is: if the banks bankrupt me, do I need to pay the loans back in future from the Islamic point of view? As I know Allah forgives every thing except people's rights; so is these money one of people's rights that Allah will not forgive until I pay them back? Does bankruptcy mean that they took their right as English law states?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

Before answering your query, we want to clarify the two following points:

1.     Staying in a non-Muslim country is forbidden except for a pressing need and with the condition of being safe from misconceptions and desires. The Prophet said: “I am free from any Muslim who lives among the polytheists.” [At-Tirmithi and Abu Dawood]

2.     Taking interest-based loans is forbidden. Allaah has waged a war against the one who involves in Riba (interest and/or usury). The Prophet cursed those who deal with it as he said: “Allaah has cursed the one who consumes Riba (i.e. usury or interest), the one who gives it to others, the one who records it and the one who witnesses it (its transaction).” He said: “All of them are equal in sin.” [Muslim]

Therefore, we say that if you are in straitened circumstances and cannot pay the capital money –because you are obliged to only pay the capital money -that you had taken, and the bank agrees to drop the debts by declaring your bankruptcy, then you are no longer obliged to pay such debts, even if you do earn money in the future. Once the right is dropped, then a person becomes free from it, and it is not compulsory on him to pay back when he becomes able to do s.

Allaah Knows best.