Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
If the person is not solvent, and hence cannot pay you, or you cannot expect to retrieve it when you want it, then you do not pay Zakah on this debt now.
Responding to your question, Sheikh Ahmad Kutty, a senior lecturer and an Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states:
If the person who owes you is solvent and you trust he can pay you any time you want your money, consider it as if it is already in your possession. In such a case, it is like money saved for you, and he should pay Zakah as you would for any net amount in your possession.
If, however, the person is not solvent, and hence cannot pay you, or you cannot expect to retrieve it when you want it, then you do not pay Zakah on it now.
You should pay the amount when you get it.
Therefore, if he was to return it to you after the lapse of a few years, then you should pay Zakah for the previous year only. And continue to pay Zakah for it in the upcoming year or years if the amount remains in your possession.
The above view is the preferred view of Imam Malik, which is based on sound reasoning and conforms to the purposes of the Shariah.
Almighty Allah knows best.
Source: AsktheScholar.com