We’ve explained that through the heter iska the borrower needs to pay the lender only the profits earned by his investment. Therefore, if the borrower did not profit, he may refuse to pay the (non-existent) dividends. However, to protect the lender, the heter iska requires the borrower to prove the lack of profit either through witnesses or by taking an oath. As long as the borrower does not swear in beis din to the contrary, it is assumed that he did profit and therefore must pay.
Last week we asked why we pay interest payments every month. Aren’t there months where we lost money? There are several reasons why this isn’t so simple.
First, the vast majority of people are very hesitant to swear and prefer to pay rather than take an oath claiming lack of profit. Moreover, the heter iska stipulates that the lender has a right to profit from any of the borrower’s profitable assets. It’s therefore very difficult to ascertain that none of the borrower’s assets appreciated or profited during this time. Another point is that the lender is entitled to the rent of any of the borrower’s properties and this profit is almost guaranteed.
Moreover, most banks in Israel have an additional stipulation in their heter iska requiring the borrower to report the lack of profits during that very month. The clause posits that the lack of a claim is an admission of profit. Meaning, if one did not report poor profits by the end of any given month, he may no longer contest the profits of that month, even by swearing. (This protects the banks immensely, because the maximum they stand to lose is one month’s interest, and almost no one will put up a fight for that.)
Rav Moshe Shternbuch, shlita, strongly maintains that if one is unaware of this clause, he hasn’t gained much from the heter iska, because he is unwittingly being forced to admit profit and therefore practically forced to pay interest. Once one is aware of this, the halachic complications are greatly reduced.
As we can see, before implementing a heter iska, it’s highly recommended to read it through or have someone explain the basic ideas, the same way one would before signing any other legal contract. Doesn’t ribbis deserve at least the same attention that we give our money?
