How does the questioner's cousin pay zakat on his wealth, given that he has his own money, has borrowed interest-bearing money from the bank, has goods on credit from wholesalers, has sold goods on credit, and has a rented shop?

If lawful and unlawful wealth are mixed, it is obligatory to investigate and dispose of the unlawful part, because Zakat is not due on it. Then, Zakat is paid on the remaining lawful wealth. As for the debts owed to him, Zakat is obligatory on what is in the hands of a solvent debtor who is not procrastinating. As for what is in the hands of an insolvent or procrastinating debtor, it is not subject to Zakat until after it is collected. The debts owed by him prevent or reduce Zakat by their amount, and this is the view of the majority of jurists.