1,182. The Cancellation of Loans

180:1 Most authorities agree that the sabbatical year cancels cash loans that are owed, even nowadays and even outside Israel. The common practice is to be lenient and many of our great rabbis have objected to this. Some of them have tried to justify the practice, which relies on the few authorities who are lenient in this matter, but one who wants to be careful in his mitzvah observance must certainly follow the ruling of the majority. In particular, one can avoid this issue by using the document known as a prozbul (which transfers private loans to the beis din, so they may be collected).

180:2 The sabbatical year cancels loans whether they were made orally or in writing, and even if property is mortgaged against the loan. If one person gave money to another as an "iska," meaning that half the money is a loan and the other half is a deposit entrusted to him, the half that is a loan is canceled while the half that is a deposit is not.