Prohibition of lawsuits and default interest

This is interest on late payment.

It is ostensibly forbidden to claim interest. In my previous message I was just wondering if this is not actually a hidden fine imposed by the state on those who delay repayment, and then perhaps it will be permissible. But now I have more thoughts on this.

1. First, since you did not deduct in advance, it is not deducted interest, but only interest for the borrower. And regarding interest for the borrower, there is room to say that Dina Demalkota will be useful.
2. The idea of interest does not really apply here, because you are not approaching a poor person and exploiting his poverty to extract money from him. He really did not fulfill his obligation to repay.
3. Furthermore, regular interest is a waiting fee for the agreed-upon loan period. But here he exceeded the agreed-upon duration and delayed even more. There is room to believe that a waiting fee for the borrower beyond the agreed-upon time is not real interest.
4. Here too, a distinction must be made between a situation in which he requests a postponement and you agree to a postponement in exchange for interest (which is like a new cutlet) and the imposition of interest as a penalty for a postponement without permission. Such a situation is nothing more than collecting damages in the form of a gram (he caused you harm in the form of a gram that prevented you for a certain period of time from using money that would have brought you profit). It is permissible for the court or the good men of the city (the leaders of the community, the Knesset and the court) to determine that damages in the form of a gram are collected.

For all these reasons, there is room for leniency in this case, since this is a matter of rabbinical law, and what is a rabbinical doubt?

By the way, the debt will probably be collected through enforcement, and they charge interest on the debt from the date of the collection request until the moment of collection. These are the regulations for enforcement. The question is whether I should return the interest they collected from the debtor. And in addition, even if I did return it, the question arises whether there was still a prohibition on interest (and the return is only a fine, but does not cancel the prohibition on interest that has already been made).

I didn't understand whether the interest is being collected for you or is it a payment to them?
If it is for them, then of course he is the one who is responsible for the soul. You are not responsible for what the victim does. He is responsible because he did not pay and forced you to rely on them.
If it is for you, then see all of my words above. If there was a prohibition, then even if you return the interest, you still violated a prohibition. And perhaps because you were forced and you are repaying, there is a division in this. But as stated in the previous message, I think there is room for leniency (because this is a collection of damages in the gram).

Thank you very much!

Following this question, the debtor contacted me with a request for a debt settlement by spreading payments. He conditioned the debt settlement on the suspension of the enforcement proceedings. If I continue with the enforcement proceedings, I risk him declaring bankruptcy. My question now is whether I am allowed to demand interest on arrears from him as part of the debt settlement. The reason I think it is allowed is because by law he must pay me the entire amount yesterday, and he is requesting a monthly payment spread over several years. If I agree to this, then I am losing the interest that I could have earned on a regular investment in the bank, and I want him to return it to me as compensation.

From a frozen perspective, I don't think it's allowed. With any interest rate, you can say that it's just compensation for your inability to invest the money. Spreading payments is like a new loan, and it's possible that if you demand interest, it will be a cut interest rate (since you cut it at the time of the loan).

Is it permissible to agree on a one-time penalty for late payment?
In addition, the debtors are a registered association and not a private individual, does this change the halachic approach to the matter of usury prohibitions?
In addition, can a business permit help in this situation?

I don't think so. This agreement is like a new loan (in essence, you are postponing repayment in exchange for interest). As I wrote above, in the context of enforcement, I think it is easier, because interest is actually a fine imposed by the state, and then it can perhaps be assumed that it is a punishment and not interest (created by a mutual agreement between you. Meatball).

Regarding an association, there may be room for more leniency. Some have written that businesses and banks are not prohibited from interest at all. Although most jurists do not accept this in a blanket manner, there is some logic to it. But in the case of an association, I doubt whether it is considered a business, since it is not established for profit, and therefore there is room to liken it to a private person. The fact that it is a corporation and not an individual is indeed a slur, but weaker. I don't know if it is right to permit it on this side.

A transaction permit must be made before the loan (because only then can the money transferred be considered a transaction and not a loan). Of course, if you do a transaction permit now and then create a new loan with interest (deferral of repayment with a penalty) in a manner that is permissible, it is a good idea. But then it is forbidden to determine this as a penalty for arrears, but to carry it out like a transaction that transfers profits (and losses) to you. It depends on the details and manner of the transaction permit and you need to check with experts to talk about exactly how this is done.