I finished Louis Newman’s The Sanctity of the Seventh Year: A Study of Mishnah Tractate Shebiit.
A topic in my reading today was the cancellation of debts every seven years (Deuteronomy 15:1-3). The rabbinic policy was that this applied to money that was loaned out to people who needed it, but not to commercial credit, since the rabbis didn’t want to run business-owners out of business. As Harriet Oleson repeatedly said on Little House on the Prairie, her mercantile cannot afford to be a charity, since it has bills to pay, too! (Some rabbinic views applied the cancellation of debts to commercial credit, however.) Loans that were backed by collateral also were not cancelled, for they were technically not outstanding loans (the types that were cancelled), as they were being temporarily repaid by the collateral until the borrower actually paid back what he owed. And fines from court cases are not cancelled.
The Mishnah tractate also talks about Hillel’s innovation of the prozbul. This was an agreement between debtor and creditor to make a court responsible for the collection of the debt, thereby circumventing Deuteronomy 15:2, which required the creditor to cancel a debt. The Bible says that a creditor must cancel the debt; it doesn’t say that a court must do so. In the prozbul, there was the requirement that the debtor have at least a sliver of land. This might have been to help secure the loan; at the same time, a sliver of land does not make good security, so perhaps what we see here is a “legal fiction” (page 209).