Question Summary:
Is Zakat obligatory on such a loan knowing that the Creditor will not pay it back?

Question Detail:

Assalamu Alaikum.
I would appreciate your guidance on the following matter regarding zakat calculation. 
About 10 months ago, I loaned a certain sum to my friend, who was supposed to pay me back within 3 weeks. However, despite several reminders and requests, he didn't give the money back. After a few more months, I was able to get back half of the money owed, but since then, there has been no effort on his part to pay back the remaining sum. 
Since it has already been a long time, I am not expecting the money back. However, I understand that one needs to include money lended in calculating his wealth for zakat. In this scenario, is the remaining sum that I am owed considered to be part of my wealth? 
Jazakallah

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
If one is owed money and he has exhausted all possible avenues to be paid and he is unsuccessful in that and he is now certain that he will not be paid, then in such a situation the loan amount is like non-existent. That amount will not be Zakatable. ^[i] 
And Allah Ta‘āla Knows Best
Mehrazur Rahman
Student Darul Iftaa
Brooklyn, NY, USA
Checked and Approved by,
Mufti Ebrahim Desai.