It is stipulated that the one who offers Udhiyah (sacrifice) should be independent of means, in that the price of the udhiyah is surplus to his needs and the needs of those on whom he spends. If a Muslim has a salary that comes to him every month, and this salary is sufficient for him and he has surplus money which he can afford the price of the udhiyah, then in his case it is prescribed for him to offer the udhiyah.
A person should offer the udhiyah when he owes a debt, unless the debt is to be paid in the future, and he knows in his heart that when the time for repaying the debt comes, he will be able to pay it off. In that case there is nothing wrong with him offering the udhiyah; otherwise he should save the money that he has in order to pay off the debt. Debt is a serious matter!! (Allahu Akbar Kabeera)
'Abdullah bin Abi Qatadah narrated from his father that: a man was brought to the Prophet for him to offer the funeral prayer, and he said: "Pray for your companion, for he owes a debt." Abu Qatadah said: " I will pay it." The Prophet said: "In full?" He said: "In full." So he prayed for him. (Grade: Sahih)
أَخْبَرَنَا مَحْمُودُ بْنُ غَيْلاَنَ، قَالَ حَدَّثَنَا أَبُو دَاوُدَ، قَالَ حَدَّثَنَا شُعْبَةُ، عَنْ عُثْمَانَ بْنِ عَبْدِ اللَّهِ بْنِ مَوْهَبٍ، سَمِعْتُ عَبْدَ اللَّهِ بْنَ أَبِي قَتَادَةَ، يُحَدِّثُ عَنْ أَبِيهِ، أَنَّ رَسُولَ اللَّهِ صلى الله عليه وسلم أُتِيَ بِرَجُلٍ مِنَ الأَنْصَارِ لِيُصَلِّيَ عَلَيْهِ فَقَالَ النَّبِيُّ صلى الله عليه وسلم " صَلُّوا عَلَى صَاحِبِكُمْ فَإِنَّ عَلَيْهِ دَيْنًا " . قَالَ أَبُو قَتَادَةَ هُوَ عَلَىَّ . قَالَ النَّبِيُّ صلى الله عليه وسلم " بِالْوَفَاءِ " . قَالَ بِالْوَفَاءِ . فَصَلَّى عَلَيْهِ .
Reference : Sunan an-Nasa'i 1960; Book 21, Hadith 143; Vol. 3, Book 21, Hadith 1962
Paying off debt takes precedence and is more important than offering the udhiyah during the days of Eid, for a number of reasons:
Paying off debt is obligatory, whereas offering the udhiyah is a confirmed Sunnah. What is Sunnah does not take precedence over what is obligatory. Even according to the view of those scholars who say that the udhiyah is obligatory, paying off debts takes precedence over it, because the udhiyah is only obligatory – according to those who say that it is obligatory – for the one who is able to afford it, and the one who is in debt is not able to afford it.
Paying off debt discharges one’s obligations, and offering an udhiyah will lead to one remaining under obligation, and undoubtedly discharging one’s obligations takes precedence over remaining under obligation.
Paying off debt is a duty that is owed to other people, whereas offering the udhiyah is something that is recommended to be done for Allah, may He be exalted, and the dues owed to people take precedence in this case.
Leaving the debt exposes one to grave danger, because there is the fear that the debtor would have to pay off his debt on the Day of Resurrection from his hasanah (good deeds), if Allah does not pay it off on his behalf. That is a matter of grave danger, because on that Day the Muslim will be in the greatest need of every single hasanah.
Thus it becomes clear that paying off debt is more important than offering the udhiyah, and no exception is made from that except in the case where the debt is deferred for a lengthy period, in such a way that the debtor thinks it most likely that he will be able to pay off the debt when that time comes, if he offers the udhiyah now, or he has given some collateral for his debt that will make it possible to pay it off if he is unable to do so when the time comes. In that case it is permissible for him to offer whatever udhiyah Allah enables him to, and he will have the reward for that with Allah, may He be exalted.
Ali (ra) narrated: that a Mukatib came to him and said: “Indeed I am not capable of my Kitabah so aid me.” He said: “Should I not teach you words that the Messenger of Allah (ﷺ) taught me? If you had a debt upon you similar to the mountain of Sir, Allah would fulfill it for you. He said: ‘Say: O Allah, suffice me with Your lawful against Your prohibited, and make me independent of all those besides You (Allāhummakfinī biḥalālika `an ḥarāmika, wa aghninī bi faḍlika `amman siwāka).’” (Grade: Hasan)
حَدَّثَنَا عَبْدُ اللَّهِ بْنُ عَبْدِ الرَّحْمَنِ، أَخْبَرَنَا يَحْيَى بْنُ حَسَّانَ، حَدَّثَنَا أَبُو مُعَاوِيَةَ، عَنْ عَبْدِ الرَّحْمَنِ بْنِ إِسْحَاقَ، عَنْ سَيَّارٍ، عَنْ أَبِي وَائِلٍ، عَنْ عَلِيٍّ، رضى الله عنه أَنَّ مُكَاتَبًا، جَاءَهُ فَقَالَ إِنِّي قَدْ عَجَزْتُ عَنْ كِتَابَتِي فَأَعِنِّي . قَالَ أَلاَ أُعَلِّمُكَ كَلِمَاتٍ عَلَّمَنِيهِنَّ رَسُولُ اللَّهِ صلى الله عليه وسلم لَوْ كَانَ عَلَيْكَ مِثْلُ جَبَلِ صِيرٍ دَيْنًا أَدَّاهُ اللَّهُ عَنْكَ قَالَ
" قُلِ اللَّهُمَّ اكْفِنِي بِحَلاَلِكَ عَنْ حَرَامِكَ وَأَغْنِنِي بِفَضْلِكَ عَمَّنْ سِوَاكَ " .
قَالَ أَبُو عِيسَى هَذَا حَدِيثٌ حَسَنٌ غَرِيبٌ .
Reference : Jami` at-Tirmidhi 3563; Book 48, Hadith 194; Vol. 6, Book 46, Hadith 3563
Rest Allah knows best.
Source: Hadith, Islam QA