All praise is due to Allah, and peace and blessings be upon our master the Messenger of Allah ﷺ.
It is forbidden for a debtor who is capable of repaying his debt to procrastinate in doing so. This is based on the statement of the Prophet ﷺ: "Procrastination (delay) in paying debts by a wealthy person is injustice." (Reported by al-Bukhārī), and his saying ﷺ: "The evasion of one who possesses the means makes it permissible to impugn his honour and to penalise him." Ibn al-Mubārak explained: "to impugn his honour" means to speak sternly to him, and "to penalise him" means that he may be imprisoned for it (Reported by Abū Dāwūd). The sharīʿah has granted the creditor the right to demand repayment of his debt, once it falls due, through appropriate means — without being entitled to receive anything beyond what is rightfully his. Although procrastination in repayment is forbidden, the sharīʿah does not penalise it by permitting the imposition of ribā upon the debt.
As for the legal interest that a person receives on account of another's delay in paying what is owed to him, this constitutes interest of the ribā type, which a Muslim is not permitted to claim or benefit from. Jābir, may Allah be pleased with him, narrated: "The Messenger of Allah ﷺ cursed the one who consumes ribā, the one who pays it, the one who records it, and the two witnesses to it, and said: 'They are all the same.'" (Reported by Muslim.)
The Jordanian Iftāaʾ Board, in Resolution No. (267) concerning the ruling on claiming legal interest, stated: "The legal interest imposed by certain laws on account of a debtor's delay in paying what is owed constitutes interest of the ribā type, which a Muslim is not permitted to claim or benefit from. Labelling it as 'compensation' does not change its underlying ribā-based reality." This was likewise affirmed by Resolution No. (2/6) of the International Islamic Fiqh Academy, which states: "It is forbidden for a financially capable debtor to delay payment of instalments that have come due; nevertheless, it is not permissible under sharīʿah to stipulate compensation in the event of such delay."
However, given that such interest has already been awarded by court judgment, there is no objection to the creditor deducting from it the legal fees and the expenses incurred in pursuing his debt. This is analogous to a borrower bearing the costs associated with a loan, as Imām al-Dardīr al-Mālikī, may Allah have mercy upon him, stated: "If someone borrows, for example, a measure of grain (irdab), the cost of measuring it out is borne by the borrower; and likewise, when he returns it, the cost of measuring it is borne by him without dispute." [Al-Sharḥ al-Kabīr, Vol.3/P.145]
It is a condition that these costs be genuine and assessed in accordance with the estimation of those with relevant expertise, so that no exaggeration occurs in their valuation. Whatever remains of the legal interest beyond these actual costs must be returned to its rightful owner — the debtor — for Allah the Almighty says {what means}: "And if you repent, you may have your principal — [thus] you do no wrong, nor are you wronged." [Al-Baqarah/ 279]
In conclusion, there is no objection to one who has been awarded legal interest by court judgment retaining from it only the genuine costs incurred in pursuing and collecting his debt, while returning whatever exceeds that to its rightful owner. And Allah Almighty knows best.
