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How are your debts created and what is the best way to get rid of them?

The first step in proper financial management is to identify your weaknesses.

Step Two - Take care of them as efficiently as possible.

What are the things you need to know in order to settle your debts as quickly and efficiently as possible?

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• Debts

Adv. Hani G. Khoury, in association with Legal Zap

Sunday, 23 May 2021, 14:34 Updated: 14:38

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Identify and address vulnerabilities - how do you handle debt properly?

(Photo: ShutterStock)

No debt claims have yet been filed against debts created in the wake of the Corona crisis, and the military operation, the violent riots and the general tension in the country have already arrived, which again threatens many businesses in all sectors and sectors. Undoubtedly, this is a long and very difficult period for business owners in Israel, which requires an effective strategy for the rapid settlement of existing debts and the prevention of the formation of additional future debts.

Most of the debts that are opened against business owners in the last year and in general, are debts to the various banks. This is usually a business that is growing or alternatively in difficulty, which leads the business owner to take a loan from the bank. Another large part of the debt is to the various cellular companies, especially in the Arab sector. Many of the buyers reach out to the cellular companies, which in turn rush to close deals, purchase a number of devices at a cost of thousands of shekels and spread the deal over several years.

The inability to meet the loan repayment or payment transaction can result from a variety of reasons in the individual or business routine, and not necessarily from national crises such as a global epidemic or military operation.

Either way, the debts all behave the same way, and as the business owner is unable to repay them, they swell.

Within a year or two, the debt may double and eventually debts of tens of thousands of shekels may reach hundreds of thousands of shekels and much more.

The "easy" solution is not always worth it

Israeli law has created for the debtors a mechanism called an insolvency proceeding, which is intended to replace the bankruptcy proceeding, to allow the debtor to reach a payment arrangement relatively easily and quickly and at some point even to get rid of his debts in full.

This may sound like a great solution for debtors, but in fact in many cases it is not worth rushing and choosing it.

First, the procedure comes with quite a few limitations on the debtor and may leave a stain on his business conduct in the future.

Second, keep in mind that this is not a magic bullet and that even in this procedure the debtor will be required to comply, at least for a certain period, with a payment arrangement.

A debtor who owns a property is especially advised to avoid insolvency as much as possible, as the procedure may lead to the realization of the property for the purpose of repaying the debt or determining a payment order based on ownership of the property, which will make it difficult for the debtor to meet the required payments.

The catch of the debtors

Before choosing an insolvency proceeding, a series of comprehensive preliminary examinations of the debtor's financial situation must be conducted and the possibility of a debt settlement with the creditors examined.

It is advisable to contact a lawyer who specializes in the field already with the formation of the initial debt in order to try to reach a debt settlement, but at this stage many debtors may find that they are in a certain trap with creditors: when the debt is created most creditors are unwilling to reach mitigating arrangements.

In most cases, it will be easier to reach an understanding with the creditors after a number of years, when they realize that they will not be able to get their money back and prefer to reach an arrangement in order to get at least some of what they deserve.

Unfortunately, as mentioned, the more time passes and the higher the feasibility of the arrangement, the more the debt swells.

Get rid of debt - creative solutions

In order to pay off the debt efficiently, quickly and in the best way for the debtor, a great deal of creativity is required on the part of the lawyer. One possible solution, for example, is to create a payment arrangement through a third party - a parent, relative or even the employer, who will be able to deduct the payment of the debt from the salary of the debtor working for him. The lawyer must try to reach a settlement directly with the creditors' incapacity, so that a minimum interest rate on the debt will be guaranteed and even the ability to cancel foreclosures. In addition, it must take into account various aspects that may affect the debt and complicate the portfolio, such as the existence of state debts (to the tax authorities, for example) which it is advisable to settle immediately and not put into the general debt portfolio.

Thus, already in the initial stages of debt formation it is advisable to seek legal advice, but do not rush to hire the services of any lawyer.

Examine in advance all the options offered by him, ask Cave for detailed explanations and do not hesitate to examine the recommendations of other clients, who can attest to his negotiation skills, the creativity and resourcefulness he demonstrates when needed, and the successes he has achieved for his clients.

Adv. Hani G. Khoury specializes in insolvency and execution proceedings, real estate and civil law.

Phone: 077-2317728

Article courtesy of Zap Legal The

information presented in the article does not constitute legal advice or a substitute for it and does not constitute a recommendation for taking proceedings or avoiding proceedings. The person appearing in the article does so at his own risk

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