The past year has brought an economic downturn for many employees and self-employed people as a result of the COVID-19 pandemic, but even before then, many people had accumulated debts and were declared bankrupt. When a person reaches such a situation, their debts to creditors are regulated through the assistance of the Enforcement and Collection Authority Registrar when the debt is between NIS 50,000 and NIS 150,000, or through the court.

In either case, the debts are structured through a convenient payment arrangement that is determined according to the debtor’s financial capabilities, allowing the debtor to repay a reasonable monthly amount until the debts are fully repaid. A state of Insolvency is declared once the debtor files an application showing that even the convenient payment arrangement that was set is beyond their means.

How Does Insolvency Proceedings Work?

As stated above, when the debtor is unable to meet the monthly payments established for them, they must submit an application to the Enforcement and Collection Authority office. This can be done independently by completing the appropriate form, but the general recommendation is to obtain the services of an insolvency lawyer in Tel Aviv if you are a resident of the central region, or an insolvency lawyer in Jerusalem if you are a resident of the capital and its surrounding areas. In any case, it is important that the lawyer be an expert in the field with extensive experience. Professional and skilled legal representation will enable you, as a debtor, to obtain the best repayment terms that can be achieved for you, leading you step by step toward the desired discharge of your debts.

When Is It Legitimate to File an Insolvency Application?

When the debtor’s total debts exceed the value of all of their assets – including money deposited in the bank, real estate assets, and/or any other property – and their monthly income does not allow them to meet the payments established for them, the option available to them is to file an application to reduce the total amount of the debt, in other words, to enter insolvency proceedings.

As stated above, it is highly recommended to carry out the process with the assistance of a lawyer who specializes in this field. Ultimately, this process can also benefit creditors, even though this may not appear so at first glance, because some repayment of debts is preferable to a situation in which they are not repaid at all.

Facing Bankruptcy? Contact a Lawyer Today

We are a law office headed by Avital Horef, a qualified lawyer and mediator, specializing in family law, administrative law, real estate, and civil law. We offer reliable, professional, first-class legal services, with extensive experience in many areas, including bankruptcy and all related proceedings. At Avital Horef’s office, we will listen to you, carefully assess your situation and capabilities, and assist you in reaching a positive conclusion to your difficult circumstances. We will be pleased to assist you.