The Torah law of "Shemitat Kesafim" forbids demanding payment of a debt after the end of the Shemita (seventh, or "sabbatical") year. Once Rosh Hashana begins at the conclusion of a Shemita year, all debts are cancelled, and the Torah forbids creditors from asking debtors to repay the loan ("Lo Yigos Et Re’ehu" – Debarim 15:2). Nowadays, the laws of Shemita apply only on the level of Rabbinic enactment, as opposed to Torah law. (Generally, people today write a special "Prozbul" document which enables a creditor to collect his debts after the Shemita year. This form is available at iTorah.com)
What is the reason underlying this prohibition? Why did the Torah establish the mandatory remission of debts once in seven years?
The Sefer Ha’hinuch (anonymous work explaining the reasons behind the Misvot), in Siman 477, explains that this obligation serves to develop within a person the quality of "Vatranut," meaning, the willingness to occasionally forego on what is rightfully his. It is proper for an individual to be willing to accept compromises for the sake of peaceful relations with his peers, rather than always insisting on receiving all that he strictly deserves. The Torah sought to help train a person in this regard by commanding him to forego on debts that he otherwise is perfectly entitled to collect.
Furthermore, the law of "Shemitat Kesafim" reinforces one’s belief that everything he has in truth belongs to the Almighty. The fact that God can command him to relinquish money owed to him serves as a reminder that God exercises absolute control over all his assets, that he not the true owner over that which he considers his property.
Another theory explains that the septennial remission of debts helps distance a person from theft. When a person realizes that he is forbidden to take from others even money that is legally owed to him, he will be reminded that he certainly has no right to take that which legally belongs to others.
The Akedat Yishak (Rav Yishak Arama, Spain-Italy, 1420-1494) suggested a different explanation, namely, that the Torah seeks to break a person’s natural addiction to the pursuit of wealth. In order to remind a person that life is not about accumulating money, the Torah requires him once is seven years to make this great sacrifice of foregoing on money owed to him. This will hopefully weaken a person’s natural desire for wealth.
A number of scholars raised the question of why the Sages did not institute a Beracha over this Misva. We might have assumed that when the Shemita year ends, a creditor should approach the debtor and recite a Beracha before announcing that the debt is annulled. Why was such a Beracha not instituted?
Some Rabbis answered on the basis of a comment of the Rashba (Rabbi Shelomo Ben Aderet of Barcelona, 1235-1310), in a responsum (18), that the Sages instituted Berachot only before Misvot requiring a concrete action. Since the obligation of "Shemitat Kesafim" is not performed through a specific action, it does not warrant a Beracha. Furthermore, one does not recite a Beracha before performing a Misva that depends upon the cooperation of somebody else. Thus, for example, no Beracha is recited over the Misva of giving charity, because if the intended recipient refuses to accept the money, in which case no Misva has been fulfilled, the Beracha will become a "Beracha Le’batala" (Beracha recited in vain). Here, too, since the debtor might insist on repaying the loan, a creditor does not recite a Beracha before announcing the loan’s cancellation.
Summary: There is a Torah prohibition against collecting outstanding debts after the end of the Shemita year, a law that serves to train a person to be more flexible and compromising, reinforces his awareness of God as the owner over all wealth, and breaks the addiction many people have to wealth. Nowadays, this law applies only on the level of Rabbinic enactment. No Beracha is recited before announcing to a debtor that the loan is annulled.
