Is it permissible to take merchandise from the debtor equal to the value of the debt and then sell it back to him in installments for a higher price?

It is not permissible for the creditor to demand an increase for late payment, as this is prohibited usury (riba). This takes two forms: agreeing to an increase at the time of the loan, or demanding it in exchange for delaying payment.

It is permissible for the creditor to take goods equivalent to his debt and sell them to obtain money. However, it is not permissible for him to sell them to the debtor in installments with an increase, as this is a usurious trick that leads to an increase in debt in exchange for an extension of the term, and is considered a form of "debt for debt" which is forbidden by Islamic law.