“I’d like to borrow $300,” Danny said to Asher.
Asher took out his wallet. “How long do you need it for?” he asked.
“Three weeks,” replied Danny.
Asher called over two people. “Please be witnesses that I’m lending Asher $300 for three weeks,” he said. He then handed the money to Danny in their presence.
Some time later, Asher said to Danny, “I want to remind you that you owe me $300.”
“What do you mean?” asked Danny, startled. “I paid you back two days ago!”
“I don’t remember you paying me, and I’m pretty sure I would have if you had,” Asher replied. “Were there witnesses?”
“No,” said Danny. “But just because you chose to be extra careful when loaning me money doesn’t mean I had to be extra careful when repaying you.”
The two decided to approach Rabbi Dayan. After hearing the claims of both sides, he said, “The Gemara [Bava Basra 170a; Shavuos 41b-42b] states that a borrower is believed if he says he repaid a loan if the lender does not hold a loan document – even if there were witnesses to the loan. He must swear a light oath (shevuas heses), though, to counter the definitive claim of the lender.” [Choshen Mishpat 70:1]
“Why is that?” asked Danny.
“Because we expect a loan to be repaid,” replied Rabbi Dayan. “Therefore, the borrower’s claim that he repaid it is a strong one. Furthermore, a borrower generally would not have the audacity to falsely claim that he repaid a loan, especially since the creditor did him a favor by lending him money.”
“However, the borrower is believed only when the loan becomes due,” continued Rabbi Dayan. “Before the due date, he is not believed without proof since people don’t always pay on time, let alone early.” [Choshen Mishpat 39:5; Sma 70:5]
“If the borrower is believed, what recourse does the lender have?” asked Asher.
“The lender can insist on a loan document,” replied Rabbi Dayan. “The borrower is not believed without proof when the lender holds a document. Alternatively, the lender can stipulate when lending the money that he should be believed that he was not repaid (ne’emanus) or that the borrower should repay only before witnesses.” [Choshen Mishpat 70:3; 71:1]
“What if the borrower claims, instead, that the lender forwent the loan (mechilah)?” asked Danny.
“Mechilah is a weaker claim since we don’t expect people to forgo loans,” replied Rabbi Dayan. “Therefore, according to most authorities, this claim is not believed. But if the borrower can claim that he repaid the loan, he is also believed to say the lender forwent the loan based on the concept of migo.” [Rema Choshen Misphat 70:1; Gra 70:6; Pischei Choshen, Halva’ah 2:35; Eidus 11:30]
“Thus,” concluded Rabbi Dayan, “Danny is not believed without proof that he repaid before the due date. After it, he is.”