Islam treats the issue of debt seriously, and there are many hadith concerning it. Cases when the Prophet Muhammad, peace and blessings be upon him, would say in his prayer, "O Allah, I seek refuge with You from sin and heavy debt," and his refusal to pray for a deceased person who had not settled his debts, serve as harsh warnings against a frivolous attitude towards debt. These actions highlight the seriousness of the consequences for a debtor not fulfilling their debt obligations.

Islam discourages taking a loan unless it is absolutely necessary. However, life circumstances may arise where a loan is needed for personal needs or business purposes. The loan can be in any form, whether cash or commodities, and can be of any size, whether large or small. To avoid disputes arising from verbal agreements, the Quran requires certain conditions to be followed in debt agreements:

General requirements:

1. Both the creditor and the debtor must document the debt contract in writing. In the Quran, Allah says: “O you who believe! When you contract a debt for a fixed period, write it down....” (Quran, 2:282). 
2. The debt contract should be witnessed by two people who are present when the terms and conditions for its repayment are agreed upon.
3. Debt must be given without interest (riba), meaning without any addition, increase, or pre-agreed stipulation for another award, contract or deal. However, Islam does not forbid the debtor from adding extra or giving a present upon repayment of the debt, provided that such an addition or present is not stipulated or pre-agreed upon before the debt agreement.

Debtor’s duties in Islam:

• Debt should only be taken when absolutely necessary, such as to meet basic needs or fulfill essential responsibilities.
• Under no circumstances should debts be incurred for unlawful purposes or luxurious living.
• When drafting a loan contract, the debtor has the right to instruct the scribe on its terms.
• Debt should be undertaken with a sincere intention to repay it. According to a hadith narrated by Abu Huraira, the Prophet (ﷺ) said, "Whoever takes people's money intending to repay it, Allah will facilitate repayment on their behalf. But whoever takes it to waste, Allah will cause waste upon them." (Al-Bukhari, 2387)
• If a creditor requests security in the form of property or assets, the debtor must provide it.
• The debtor should repay the debt promptly, by the agreed-upon date or earlier.
• It is incumbent upon the debtor to settle all debts before death; otherwise, their legal heirs are responsible for clearing the debts.

Creditor’s duties in Islam:

• The loan should be given to a genuinely needy person who requires it for legitimate needs.
• If the debtor becomes insolvent and cannot repay the loan, the creditor has the right to forgive the debt. This act is considered virtuous and brings many rewards.
• If the debtor is unable to make full payment, the creditor should accept payment in installments.
• The creditor is permitted to use stern language with a solvent debtor who fails to repay the loan despite repeated demands. However, the creditor is instructed not to lose their composure. They should treat the debtor kindly and preserve their dignity without causing harm.