Qitzur Shulchan Arukh – 65:14

יד: מי שיש לו שטר חוב על חברו מתר למכרו לאחר בפחות, ואפלו קדם זמן הפרעון. ויכתב המוכר להלוקח, אני מוכר לך שטר זה, וקני לך איהו וכל שעבודו. וצריך שיהא האחריות על הלוקח. רק אחריות שבא מחמת המוכר, כגון שהשטר פרוע וכדומה, יכול להיות על המוכר. וכשם שיכול למכר את השטר לאחר בפחות, כמו כן יכול למכרו גם להלוה בעצמו

Someone who has an IOU [literally: contract of obligation] on his friend can sell it to another for less [than the value of the loan], even before the time of collection. The seller should write to the buyer, “I am selling you this constract, and acquire it for yourself alone with all its rights.

But the buyer must accept full responsibility [for the collection]. Only those responsibilities caused by the seller, such as the contract being in default, may be retained by the seller.

Just as the possessor of the note can sell it to another person for less than its face value, he is also permitted to sell it to the borrower for less than the amount originally stipulated.

An IOU contract has value and can be bought and sold. This is non-obvious, as differences in between the purchase price and the face value will look like interest. Particularly if borrower buys back the contract himself at a lesser price but a much earlier time. It seems very close to a reduction in amount in exchange for prepayment.

In the next halakhah, we will see more about how to utilize this to financially engineer a workaround for interest. And how that solution avoids the “unbrotherly” issues that interest raises.

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