Is Zakat obligatory on money that has reached the Nisab and a Hawl (lunar year) has passed over it, while its owner simultaneously has a debt equal to that money?

If the debt owed by a person is equal to the amount of money they possess, then, according to the majority of jurists, there is no Zakat due on this money, because debt prevents the obligation of Zakat on hidden wealth such as cash and trade goods. This is based on the Prophet's (peace be upon him) saying: "The best charity is that given when one is rich (i.e., has no outstanding debt)," and what was narrated from Uthman (may Allah be pleased with him): "This is the month of your Zakat. Whoever has a debt, let him pay it so that you may then pay the Zakat on your wealth."

This ruling applies if the person does not have a surplus of other Zakat-eligible assets (such as cars and buildings) that could offset the debt.