In the video: Roy Cohen, president of Lahav - the Chamber of Self-Employed in Israel, in an interview for the show Walla We Solved with Advice for the Self-Employed in a War Crisis/Still Photo: Reuven Castro, Reuters and Flash 90
Do you owe the bank money?
Was your livelihood damaged by the war?
In recent weeks we have the impression that the banks have lost their patience with debtors and we are experiencing an increase in the number of legal proceedings being taken against debtors - authorized dealers, private individuals or companies.
A bank pressing and chasing is a problem, what are the possible solutions and the best and most effective ways to deal with such a situation?
Is it possible to reach an agreement with the bank regarding the distribution or cancellation of debt, without the involvement of a court?
Definitely.
The banks as well as institutional creditors such as municipalities usually initiate from time to time a concentrated approach to the debtors in order to reach individual arrangements with them, especially at the end of the year so that they can present improved business results in their annual balance sheets.
The incentive for such arrangements is the consideration of practical collection options.
Experience shows that the bank will prefer the settlement over a legal battle that involves costs.
There are several variables that the bank takes into account when making a decision such as the 'age' of the debt (the older the debt, the higher the chance of the bank's flexibility);
the age of the debtor (the older the debtor, the greater the willingness for relief);
When there are no assets to realize (as long as it is a debtor who has assets that are difficult or impossible to realize) the willingness to ease the arrangement will increase.
And what if the bank refuses to negotiate regarding the distribution or cancellation of part of the debt?
If the business cannot be rehabilitated by making organizational changes, an insolvency attorney must be hired, who will act in one of two possible ways: obtaining a rehabilitation order or a debt settlement.
Submitting a request for an order to open proceedings to the supervisor (the official receiver or the Ministry of Justice). Its receipt will delay the proceedings and the case will be transferred to the court, where at the end of the proceedings the goal is to obtain an order for economic rehabilitation/immediate dismissal. A request for approval of a debt settlement to the competent court even before the issuance of an order to open proceedings and even after the issuance of such an order either to the court or to the Office of the Hotzlap (for low debts).
In applying for a creditor settlement, this is a quick procedure (the procedure in which an order is issued to open proceedings is still relatively long and complex, which usually takes between 4-6 years on average).
The court encourages creditor arrangements and expanded the "corona arrangement" and in fact any business can benefit from the corona creditor arrangement even without a direct connection to the corona situation.
.
"The banks as well as institutional creditors such as municipalities usually initiate from time to time a centralized approach to debtors in order to reach individual arrangements with them, especially at the end of a year"/ShutterStock
When is it better for a debtor to apply for a full insolvency procedure (previously called 'bankruptcy' or 'liquidation')?
In certain cases, and especially when there are no real assets to realize, a debtor who has debts of large amounts, who cannot pay off his debts, can apply for bankruptcy proceedings, at the end of which, in exchange for paying a relatively small part of his debts, he will be able to start a new chapter in his life, compared to a situation where within the framework of the execution He will have to continue paying all his life, without any real ability to continue his routine, accumulate property, etc.
An individual's insolvency procedure (bankruptcy) should be a last resort for dealing with debts and after previous options have been exhausted such as reaching a debt settlement arrangement with the banks, which are still usually the main creditors. You should know that as soon as the order to open the proceedings is issued, a delay order will be issued Leaving the country, restriction on withdrawing checks from the bank account, holding a credit card without credit (such as a debit credit card), prohibition to establish a corporation or to have an interest in a corporation except with the approval of the commissioner, etc. The
bankruptcy procedure today is aimed at rehabilitating the debtor and returning him to economic life. The debtor's means within the framework of execution procedures result in the continuation of the execution procedures, which does not benefit the debtor and/or the creditors and/or the execution system on which falls the burden of managing a huge number of cases
. I do not have the amount required to pay in order to remove the lien. What are they What options are available to me? If the foreclosing party is a government agency, one must contact that government body directly and come to individual arrangements with it that will allow for the removal of the foreclosure. Governmental parties greatly appreciate people who contact them on their own initiative and show seriousness in
their
desire to settle the debts.
If it is a case that was opened in execution?
In an insolvency procedure that ends with the receipt of a discharge, also apply to the Hotzlap office.
It is even possible to apply for a creditor arrangement without issuing an order to open proceedings also in execution for low debtors.
As a general rule, when an insolvency case is opened with amounts as low as NIS 166,000, the request is referred to the Enforcement and Collection Authority, where no order to open proceedings will be issued until the representative of the registrar makes an attempt to settle creditors. Only if this settlement is unsuccessful will the registrar issue an order to start proceedings.
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Are the reserve servants entitled to protection against collection procedures?
Since the war, the courts and even the commissioner take into account the circumstances involved in the situation and act sensitively in debtors' insolvency procedures.
At the beginning of November 23, a special grants law went into effect, the purpose of which is to ensure that grants awarded during the state of emergency, by virtue of government decisions, will be protected from seizure.
The law also affects the possibility of transferring the funds to the women's fund in insolvency proceedings.
It should be noted that the scope of protection, which will be given to the various grants, will not necessarily be uniform and there may be grants that can be transferred to the women's fund.
The various characteristics of the grants may change the way in which they should be treated within the framework of insolvency proceedings (for example: is it a grant that replaces wages or a grant intended for subsistence purposes only).
By the way, during the period of the special state of emergency, relief will be given to all debtors in the execution files and no foreclosure procedures and seizure of movable property, vehicle seizure, delivery of a notice of cancellation and an eviction order (with the exception of rented eviction when the winner is an individual) and an order of collection will be carried out against them.
Special concessions will also be given to debtors who belong to populations affected by the war (those entitled to protection and their relatives) such as soldiers;
police officers;
prison guards;
firemen;
casualties;
kidnapped or missing;
wounded;
And evicted regarding such debtors, it is not possible to open a new enforcement case, and it is also not possible to take third-party garnishment procedures, wage garnishment, realization of a monetary garnishment, and also it is not possible to carry out a prison order in an alimony case and execute a judgment for rented eviction.
(unless the head of execution ordered otherwise for special reasons).
The author is attorney Ofer Shapira, Migdal Recital, who represents creditors and debtors in insolvency proceedings.
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