Suppose the obligation is 1,000 dirhams while the secured asset was worth 800. The debt is 1,000; the collateral value is 800. Those figures need not coincide.
One must not treat collateral valuation as automatic payment of the entire debt. Nor does receipt of replacement security by itself erase the borrower’s obligation. Its eventual accounting depends on settlement and the applicable rules.
Opening interactive controls...
Separating the debt from substitute value
Kitab al-Rahn: Manumission, Destruction and Liability for Injury
Suppose the obligation is 1,000 dirhams while the secured asset was worth 800. The debt is 1,000; the collateral value is 800. Those figures need not coincide.
One must not treat collateral valuation as automatic payment of the entire debt. Nor does receipt of replacement security by itself erase the borrower’s obligation. Its eventual accounting depends on settlement and the applicable rules.