Misva #587: Returning a Collateral

The Torah commands in Parashat Ki-Teseh (Debarim 24:13) that a lender who took collateral from the borrower must return it to the borrower when he needs it. Previously, the Torah introduced a prohibition forbidding the lender from keeping the item with him when the borrower needs it; in this verse, the Torah adds an affirmative command to return the object. Thus, for example, if the lender seized a tool which the borrower requires for his livelihood, then the lender must return it in the morning, when the borrower needs to work, and the borrower then brings it back to the lender at the end of the day. If the lender took a blanket which the borrower needs to keep him warm at night, then the lender must return it in the evening, and the borrower then brings it back to the lender in the morning. The Sefer Ha’hinuch explains that the Torah introduced this command in order for us to train ourselves to act kindly and compassionately. By treating others with mercy and sensitivity, we become worthy of Hashem’s mercy and abundant blessings. This command applies only with regard to collateral taken in lieu of payment once the debt was due and the borrower did not repay. In such a case, the lender must return the object to the borrower when the borrower needs it. But if the loan was given from the outset on collateral, then the lender may keep the collateral with him at all times, because this was the condition on which the loan was given. The Sefer Ha’hinuch raises the question as to what purpose there would be in taking collateral in lieu of payment if it must be returned to the borrower whenever he needs it. If the concept of taking collateral is to apply pressure upon the borrower to repay the loan, then why does the Torah require returning the item to the borrower whenever he needs it? Does this not undermine the entire purpose of collateral? The Sefer Ha’hinuch answers that, firstly, the collateral assures that the debt will not be cancelled at the end of the Shemita year. Normally, debts are cancelled at the end of Shemita, but when the lender took collateral in lieu of payment, the debt remains even after Shemita. Secondly, collateral allows the lender to collect the debt from the borrower’s inheritors if he dies before repaying the loan. Normally, after a debtor passes away, the creditor cannot collect the moveable possessions in the estate as payment. If, however, he had taken collateral in lieu of payment, then he may. If the item taken as collateral is a luxury item, which the borrower does not need for any practical purpose, then the lender does not need to return it at all. He may hold onto it for thirty days, and then, after thirty days, he may sell it under the auspices of Bet Din, and then keep the money as payment for the loan. A lender who refuses to return an item taken as collateral when the borrower needs it is in violation of both this affirmative command, and the prohibition mentioned earlier.