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When
At the end of seven years (the end of the Shmitta year) you shall institute a 'release'.
The positive commandment to annul debts from loans due takes effect at the end of the Shmitta year; that is right at sunset on Erev Rosh Hashana. This year that would be September 13, 2015 at around 6:27 PM in Jerusalem.
Most Rishonim rule that the negative prohibition of
he shall not press his fellow or his brother begins at that time too [Rambam Hilchos Shmitta V'Yovel 9: 1].
Interestingly, Rabeinu Asher ben Yechiel, The Rosh (1250, Cologne, Germany - 1328, Toledo, Spain)
rules that specifically the negative prohibition he shall not press his fellow or his brother begins earlier; that is, at the onset of the Shmitta year (for arguments sake, which fell out on September 25th 2014 last year) [Rosh Maseches Gittin chapter 4 §20].
This concept of annulling loans is called Shmitas Kesafim; releasing monies.
Nowadays
The Torah links the laws of Shmittas Kesafim to the laws of Shmittas Karka, the laws requiring the farmer to leave his/her field fallow during the seventh year. Meaning that the lender is required to release his/her loans when the farmer is required to leave his/her field fallow [Maseches Gittin 36a].
Biblically one is required to leave the field fallow when most of the Jewish people are settled in the land of Israel within their appropriate tribal inheritances.
As of the writing of this sentence, the prophecy of "and the children will return to their boundaries"
[Jeremiah 31]
has yet to be realized.
As such, presently, the prevalent custom and ruling remains to regard both the laws of leaving fields fallow and releasing loans as Rabbinic Ordinances. [Choshen Mishpat § 67: 1 See Pischei Teshuva regarding the gravity of not adhering to a Rabbinic Ordinance.]
Whereas the laws of leaving fields fallow apply in the Land of Israel, the laws of releasing loans apply to Jews throughout the World[Rambam Hilchos Shmitta V'Yovel 9: 2].
{Note: Ramban (1194-c. 1270),, testifies that the Jews who dwelled in the Land of Israel while he lived here adhered to the laws of Shmitta (1267- 1270) [Choshen Mishpat § 67: 1].}
How
At the end of the Shmitta year, there is a mitzvah for every creditor to say that he/she annuls any outstanding loans.
What happens to one's loans if one does not do annul them?
There are two opinions amongst the Rishonim.
Some opine that while the lender transgressed a positive commandment, the loan remains intact.
Other Rishonim rule that all loans are automatically void come the end of the year. There is simply a mitzvah for the lender to verbally agree with the reality.
(This is similar to annulling one's chametz, leaven on Erev Pesach. The leaven becomes automatically ownerless even if the owner fails to annul it.) [Rambam Hilchos Shmitta V'Yovel 9: 4].
Which Debts?
"Every creditor shall release his authority over what he has lent his fellow..."
Shmitta does not interfere with debts that are only due after the end of the Shmitta year
[Rambam Hilchos Shmitta V'Yovel 9: 9].
Debts which are annulled at the end of Shmitta include loans with and without liens on real estate [see 5. below for exceptions], monetary loans, neighborly loans of consumable objects.
Credit owed to stores are not considered what he has lent to his fellow unless the proprietor has sent a bill (or according to some after a designated due date) [Rambam Hilchos Shmitta V'Yovel 9: 11].
Similarly, wages due to a worker are not considered what he has lent to his fellow unless the proprietor has sent a bill (or according to some after a designated due date) [Rambam Hilchos Shmitta V'Yovel 9: 11].
Loans with designated collaterals which are equal to or exceed the value of the loan are as though the lender has already collected the complete loan. As such, Shmitta does not annul those debts [Rambam Hilchos Shmitta V'Yovel 9: 14].
Shmitta interferes with a Halachic Warranted Investment in the following way.
We explained that a Halachic Warranted Investment is such that 50% of the investor's money is viewed as a loan to the invested. The invested is fully liable to repay this 50% regardless of what transpires. The remaining 50% is viewed as a deposit. The invested assumes limited liability on the second 50% and in return for the investor taking a risk for losing the second 50%,the investor can charge the invested.
Shmitta annuls the first 50% of the investment which took the form of a loan [Choshen Mishpat 67:3].
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To Be Continued G-d Willing...
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