He took a loan with riba before becoming Muslim – how should he pay it off now?

We put this question to Shaykh Muhammad ibn Saalih al-‘Uthaymeen, may
Allaah preserve him, who answered as follows:

It was reported that the Prophet
(peace and blessings of Allaah be
upon him) addressed the people on the day of ‘Arafaah, and said: “The riba of
the Jaahiliyyah is cancelled.” This was in spite of the fact that these contracts had
been made during the time of Jaahiliyyah and before the ruling on riba was established. If
it is possible for him not to pay the interest on the loan, then he should not pay it, but
he should not make a gain twice. The Muslim judge or leader should take the amount he was
supposed to pay in riba and give it in charity or put it in the bayl al-maal (Islamic
treasury).

Question:

You said, “he should not make a gain twice.” What does this
mean?

Answer:

The first gain was when he benefitted from the money that he took from
the bank, for example. The second gain is the interest which, if he does not pay it to the
bank, he will have made a second gain… But still, he should not pay it to the one who
loaned him the money on the basis of interest. For example, if he borrowed a million and
owes interest of one hundred thousand, do we say pay back the million and keep the hundred
thousand? No, we say pay back the million but do not give the hundred thousand to the
usurer, and do not keep it for yourself as a profit or gain… Put it in the bayt
al-maal or give it in charity. And Allaah knows best.