"This is the matter of Shemittah (the sabbatical year): Every lender
shall cancel his debt which his friend owes him..." (Devarim 15:2)
When shemittah year comes, in addition to stopping all agricultural work
in the Land of Israel, all debts are canceled, unless a pruzbul (override)
document was written. This applies nowadays by law of the Sages.
Even if the borrower offers to pay, the lender must say, "The debt is
cancelled." If the borrower continues to insist on paying, the lender may
accept the payment (Shevi'is 10:8).
The Sefer HaChinuch (mitzvah 47) explains that this mitzvah teaches us to
be generous and to realize that Hashem supplies all of our needs,
including monetary ones. When a lender forgoes his payment due to
shemittah, Hashem will reimburse him.