Here are Apple's instructions for device owner to ready their device for sale. I suggest you hand the instructions to them and make them prove to you that they have complied.
They can always restore the device after they pay you back.
[h=1]What to do before selling or giving away your iPhone, iPad, or iPod touch[/h][h=4]Learn what to do before you sell or give away your iPhone, iPad, or iPod touch.
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If you still have your iOS device[/h]Before you sell or give away your iOS device, make sure that you've removed all of your personal information. Follow these steps to protect your data and get your device to its factory default state for the new owner:
- Back up your device.
- Go to Settings > General > Reset, then tap Erase All Content and Settings.
- This will completely erase your device and turn off iCloud, iMessage, FaceTime, Game Center, and other services.
- If you're using iOS 7 and have Find My iPhone turned on, your Apple ID and password will be required. After you provide your password, the device will be erased and removed from your account so that the next owner can activate it.
- Contact your carrier for guidance on transferring service to the new owner.
When the device is turned on for the first time by the new owner, Setup Assistant will guide them through the setup process.
Important: Do not manually delete contacts, calendars, reminders, documents, photo streams, or any other iCloud data while signed in to your iCloud account, or the content will also be deleted from the iCloud servers and all of your iCloud devices.