Prozbul doesn’t help unless the borrower has land. Even if it’s a minimal amount, it’s sufficient. Even if he only has a pot with a whole in the bottom [thus connecting its dirt to the ground], it is sufficient. Even if the borrower has nothing, but the cosigner or someone who owes this borrower money [does], that also helps. And if they also do not have anything, if the lender has a minimal amount of land, he could give rights to it to the borrower, even through another party and not before the borrrwer, and the pruzbol would help.
A prozbul does not retire [at the end of the shemittah year].
And what is a prozbul?
The lender goes to three Torah observant men that they should be a beis din, and he says to them, “You, the judges, I give over to you every debt I have incumbent on so-and-so and so-and-so, that I may collect them any time that I wish.” And they write a prozbul for him with this text: “With us three sitting as one, so-and-so the lender came and said before us I give over to you etc…'” and the three sign on the bottom either referred to as judges or as witnesses. They can do this also at the end of the year, which is on erev Rosh haShanah before sunset. Some say, that they don’t have to specifically write the prozbul, it’s sufficient for him to say so before them. Even if there is no beis din in his location, he is allowed to say “I hand over my contracts to the beis din which is in such-and-such place.”
There is a law of prozbul missing from this description, wait for 180:16!
When a borrower comes to pay the lender a debt that the shemittah [already] passed on it, the lender should say to him, “I retire the debt, and you are already absolved [of any obligation] from me.” If the borrower says to him, “Even so, I want that you accept it from me”, it is permitted for the borrower to accept the money from him.
And [in this situation,] the borrower should not say “I am giving this to you because of my obligation”, rather he should say to him “These [monies] are mine, and as a gift, I am giving them to you.” The lender may put in personal effort and work so that they borrower would say to him that he is giving the money as a gift. But if he can not accomplish this, he should not take the money.
As we said, a primary purpose of the shemittah of loans is to prevent eternal hounding by the lender. Therefore, there is no problem if the money is given willingly. The only kind of finagling discussed here is in a case where the borrower comes on his own after the end of shemittah. He wants to repay the loan, so it’s not hounding him to accept it. However, he isn’t allowed to repay the loan, since there is no loan. Instead, you should try to get him to phrase it as a gift. If you can’t, then you may not accept the money.
Someone who comes [to collect] on the strength of [a claim by] a non-Jew, he is like a non-Jew. Therefore, if someone buys from a non-Jew a debt contract on a Jew, it does not retire [at shemitah] for the non-Jew could have collected on his contract forever.
Similarly, someone who cosigned to a non-Jew on behalf of a Jew, and the Jew didn’t pay, requiring the cosigner Jew to pay the non-Jew and collect from the non-Jew the contract on the borrower, the loan doesn’t retire. But if there was no contract, but he collected for his friend orally and now he had to pay [the loan] off for him to the non-Jew, he would not be obligated [after shemittah to repay the cosigner].
The seventh year does not retire loans except at its end. Therefore, someone who lends his friend money during the shemittah year itself, he can collect the entire year. And when the sun sets on erev Rosh haShanah, the obligation is lost.
In se’if 12, the contrast between having a contract and not having a contract appears to be as follows:
If the loan had a contract, then there is a piece of paper being handed from the non-Jew to the cosigner. That paper has value, the power to collect forever, since it was created for a loan involving a non-Jew.
If there was no contract, then effectively the lent the original borrower money when he paid the non-Jew on his behalf. This is then a second loan, one between two Jews, and thus shemittah applies.
Someone who sells some thing to his friend on credit, it is as though he lent the money, and [the implied loan] retires. However, a shopkeeper who sells to others on credit, and it isn’t his way to collect until it accumulates to some amount, [the tab] does not retire. However, if he stands over it like it’s a loan, which means he calculates the whole thing and writes in his notebook the running total, then it is like a loan and does get retired.
A workman’s pay is not retired. However, if he stands over him like it’s a loan, it does retire.
One concept of shemitas kesafim, the retirement of loans on the shemittah year, is to put a cap on how long someone can be hounded by his creditor. Therefore, the the lender doesn’t have the right to collect the loan yet, shemittah doesn’t terminate the lown. Similarly, a seller who uses credit but only mentions the tab when it gets to a certain size isn’t subject to shemittah, since a sale on credit isn’t fully a loan, and the ills shemittah is there to eliminate aren’t involved. Similarly most employees who wait for payday. However, if storeowner or worker makes a big deal about the credit each time an amount is added to it, then it is sufficiently like a loan in the very way that matters to qualify.