Giving Zakat to Recover One's Own Loan

Short answer: With strings attached it is invalid — 'I give you zakat, you repay me' as a deal or understanding fails as zakat, since no true tamlīk (unconditional transfer of ownership) occurred; it is effectively routing your own money back to yourself. But if you give zakat to the needy debtor unconditionally and he then repays you entirely of his own accord, both stand — the zakat is discharged and the recovery lawful. Details: The test is freedom: after receiving zakat the money is his — to spend on his family or to repay you, as he wills; any pressure, hint or binding expectation from your side makes it a device (hilah). The shariah itself offers the clean alternatives: grant the insolvent time (obligatory), forgive if you can (excellent charity — though not zakat), or pay zakat directly against his debt under the ghārimīn category with no expectation. Intentions are never hidden from Allah — 'deeds are but by intentions'. Evidence: Quran 9:60 (the category exists for the debtor's welfare, not the donor's advantage); Sahih al-Bukhari 1; Quran 2:280; the majority, the Permanent Committee and Shaykh al-Uthaymin. For complex individual cases, consult a qualified scholar.