Last week we began discussion of oshek, which involves cheating others from money or items that rightfully belong to them. There are many different situations in which a person can commit oshek.
Refusing to pay a loan constitutes oshek This includes outright refusal to pay back the loan, denying it was ever made, and claiming that the loan never took place. A person who would like to pay the loan but is unable to, is not guilty of oshek.
What does it mean that he is “unable” to pay his loan? If he has insufficient money to meet his basic food needs for 30 days, and his basic clothing and shelter needs for 12 months, and has no assets, he may defer paying. If a person finds himself in such a situation where he feels that he may be “unable” to pay the loan (and therefore not transgress oshek by not paying back the loan) then he should consult an Orthodox Rabbi to clarify the law in his specific case.
It is important to note that such poverty does not nullify the loan permanently. Rather, it merely exempts him from transgression of oshek. Needless to say, once the borrower attains sufficient funds, then he is obligated to repay the loan.
It is essential to recognize the severity of refusing to pay back a loan. The Rabbis describes a person who commits this sin as a rasha, an ‘evil’ person. The great Rabbi, The Chofetz Chaim zt”l, added that someone who wrongfully holds the money of others will not succeed through his dishonesty. Rather, he will part from his ill-gotten gains.
 Much of the information for this essay is taken from “Halachos of Other People’s Money” by Rabbi Yisroel Pinchos Bodner.
 His real name was Rabbi Yisrael Meir Kagan. He is universally known as the ‘Chofetz Chaim’, the name of his famous book on the laws of Lashon Hara, (negative speech).