The Sabbatical year is more than just a cessation from agricultural labor. It is called Shemitah, the year of remission, since all outstanding debts are cancelled during this year. (A legal loophole to avoid debt remission was devised by first-century scholar Hillel. He designed the pruzbul, a legal device that enabled lenders to collect debts by transferring their loans to the public court.)
What happens if a debtor insists on repaying his loan? The Mishnah teaches:
“If a debtor wants to repay a loan during the seventh year, the lender only needs to formally declare, ‘I am canceling the debt.’ If the borrower replies, ‘Nonetheless, I am paying it back,’ the lender may accept repayment. This is learned from the verse, “This is the word of Shemitah” (Deut. 15:2) [i.e, it is sufficient to verbally cancel the debt, even though it is actually repaid]. (Shevi'it 10:8)
The Mishnah concludes that not only may a debtor repay his loans, but that it is praiseworthy to do so.
What is the purpose of the Shemitah year debt-remission? Why is it sufficient if only lip service is given to canceling debts? Why did the Sages commend debtors who insist on paying back loans?
The seventh year serves to rectify the social ills and inequalities that accumulate in society over the years. When poorer segments of society borrow from the wealthy, they feel beholden to the affluent elite. “The debtor is a servant of the lender” (Proverbs 22:7). This form of subservience can corrupt even honest individuals in their dealings with the rich and powerful.
The Sabbatical year comes to correct this situation of inequality and societal rifts, by removing a major source of power of the elite: debts owed to them.
However, the Torah stresses that a healthy and successful society is not achieved via annulment of private assets and redistribution of wealth. It is only the extreme cases of inequality and social injustice that the Torah seeks to remedy by remitting private debts, a partial repair of social inequalities once every seven years.
Nonetheless, it is important that the cure itself does not lead to detrimental side effects, namely the belittling of personal rights of property and ownership. Therefore, the Torah allows the cancellation of debts to be limited to formalities, a technical declaration of remission — “This is the word of Shemitah.” Just the verbal expression of the right to be released from all financial obligations may suffice to neutralize the feelings of dependence and obsequiousness towards the wealthy lender.
The Torah does not seek to reduce the borrower’s sense of honesty and integrity. Therefore, the debtor may reject the offer of remission, out of a sincere desire not to benefit from the wealth of others. In fact, the Sages praised this honorable insistence on repaying loans.
(Gold from the Land of Israel, pp. 314-315. Adapted from Ein Eyah vol. II p. 404)