{"id":9748,"date":"2018-08-17T08:56:06","date_gmt":"2018-08-17T06:56:06","guid":{"rendered":"https:\/\/freshstart.org.il\/we-got-into-debt-what-do-we-do-now\/"},"modified":"2025-09-10T15:54:35","modified_gmt":"2025-09-10T13:54:35","slug":"we-got-into-debt-what-do-we-do-now","status":"publish","type":"page","link":"https:\/\/freshstart.org.il\/en\/we-got-into-debt-what-do-we-do-now\/","title":{"rendered":"We got into debt \u2013 what do we do now?"},"content":{"rendered":"\t\t
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We got into debt - what do we do now?!<\/h1>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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First of all - relax... everything will be fine.<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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True, if you have not paid a debt, you will likely receive a call at some point from the creditor (the one to whom you owe money) or from his lawyer.
Whether you have received such a request or not \u2013 don't wait!<\/b>
It is very important that you take care of the debt at this stage, even before an enforcement case is opened!
why?
<\/b> Because from the moment an enforcement case is opened, collection expenses, fees, abnormal interest rates, and other expenses will be added to the debt, and the debt will only swell and increase by tens of percent.<\/b><\/h5>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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And that’s not all – because from the moment an enforcement case is opened against you, the creditor can also impose liens on your bank account, your salary, come to your home and impose other unwanted and unpleasant restrictions such as delaying your departure from the country, and so on.<\/p>

It is important to understand that foreclosures and restrictions are imposed according to the rules set forth in the law, and not according to an arbitrary decision by the bank or the registrar of the bankruptcy court. Therefore, it is important to deal with debts immediately – thereby saving many costs and avoiding foreclosures and additional heartache. <\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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So how can debts be erased?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Debt cancellation procedures are legal procedures that work according to very defined and clear rules.
Broadly speaking, there are several main routes to debt cancellation, all of which are relevant to any person who owes money, whether collection proceedings have already been initiated against them or not:\n<\/h5>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The simple solution is, of course, to negotiate with creditors and try to reduce the debts to an amount you can afford, but for this, an external source of financing is needed.<\/p>\n

It is important to know that within the framework of such negotiations, it is sometimes possible to receive “haircuts” of tens of percent of the debt (depending on the case, of course), but according to most, creditors will agree to erase part of the debt only if they receive immediate<\/strong> payment of the settlement amount.<\/p>\n

If you offer a payment plan, they will likely not agree to give you a discount at all, and may even prefer to continue with collection procedures.<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t

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The default of debt cancellation procedures. Insolvency proceedings<\/a><\/span> (or by its old name – bankruptcy) are procedures designed to give a “second chance” to those who have gotten into debt in good faith, and are unable to pay their debts. <\/p>\n

The procedure begins with a stay of proceedings<\/strong> – an order from the Insolvency Commissioner (Ministry of Justice) that halts all enforcement proceedings and lawsuits being filed against you, and ends with<\/span> a discharge order<\/strong> , that is – an order that erases all debts you had at the beginning of the proceedings.<\/span> <\/p>\n

During the process, you will be required to regularly report your income and expenses, as well as pay a fixed monthly payment (derived from the household’s income and expenses, regardless of the amount of debt!). As part of the process, a court official will be appointed, whose job will be to locate assets you own, review the reports you have submitted, and recommend to the court how the process will proceed. <\/span><\/p>\n

About a year later, a court hearing will be held, where<\/span> a repayment plan<\/strong> will be determined for you , meaning it will be decided what amount you must pay to receive<\/span> a discharge order.<\/strong>. It is important to know that, in most cases, they will not ask to sell your apartment or car (unless it is a luxury vehicle), but you will probably be required to pay the fund a portion of their value. Once you have paid the full amount of the repayment plan, you will be able to receive <\/span>A discharge order<\/strong> will then be issued, and all debts will be permanently erased,<\/span> except for alimony debts, fines, and debts created through fraud<\/u><\/strong> .<\/span><\/p>\n

According to the Insolvency Law, the court may condition the repayment plan on participation in a financial rehabilitation process.<\/span><\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t

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In certain cases, a comprehensive arrangement can be proposed under court supervision. This can be done as part of an insolvency proceeding or in a separate proceeding. <\/p>\n

In such a case, if the majority of creditors (51% of the creditors, who have 75% of the amount<\/u> of the debt) agree to the arrangement you proposed \u2013 the court will approve the arrangement, which means that all debts you had until the beginning of the procedure will be erased, just like in an insolvency procedure.<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t

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Consolidation of cases is a procedure in execution, intended to provide an interim solution to a debtor who cannot pay all of his debts immediately but requests a distribution over time.<\/p>\n

As part of a case consolidation procedure, the debtor is assigned a fixed monthly payment, according to his abilities, and on the condition that the entire debt is settled within a maximum of 4 years (the maximum period varies according to the amount of the debt). In such a case, the debtor must deposit an amount of 3% of the debt at the beginning of the procedure, and usually all proceedings in the case will be delayed, as long as the debtor meets the monthly payment that was set for him. It is important to clarify that the debt in execution continues to accrue interest, and in fact grows day by day. <\/p>\n

In the past, there was also the option of being declared a debtor with limited means, and then the debt could be spread over longer periods, but in September 2019, with the entry into force of the Insolvency Law, this option was eliminated (a mistake, in our opinion. We hope it will be corrected), and anyone who cannot pay the debt in the above-mentioned spread (up to 4 years) will automatically be referred to insolvency proceedings.<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t