Saturday, August 30, 2014

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Yay, Bankruptcy in Israel!

imageBelieve it or not, bankruptcy did not exist in Israel until this year.  People finding themselves in crushing debt situations basically had no way out, and often the easiest result was to leave the country.

An Israeli lawyer emailed the blog to let us know this is no longer the case…

Long-awaited reform in Israeli bankruptcy laws are effect.  If old debts are preventing you from returning home to Israel, you now have the bankruptcy mechanism to restart your life in Israel.

One feature in the reform is that Israelis living abroad can file for Israeli bankruptcy while living abroad.  If old debts are preventing you from returning home to Israel, you now have the bankruptcy mechanism to restart your life in Israel.

The plan has two aims: to create an effective mechanism to distribute the assets of the debtor who is requesting bankruptcy, and to allow him to start over, to begin a new page, with the exact knowledge of when the procedure will end.  A bankrupt person is called “poshet regel” in Hebrew.

The bundled debts are wrapped by a single payment by the court. Today the minimum monthly payment set by the court is around 200 Shekels and the highest is 5,000 Shekels.

Debts to banks, credit card companies, cell phones companies, municipalities, private individuals and other businesses are covered by this procedure.  Taxes, fines, VAT, some National Insurance (Bituach Leumi) will not be totally pardoned by the procedure, but most of the increases due to the index and interest can be cancelled.

This is not an inexpensive or quick procedure, but it could be the difference between staying away from Israel forever, or coming back and starting over fresh.  Or, for those living in Israel, between having to leave the country or being able to stay and start over.

The lawyer who shared this information can be contacted here.

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