Insolvency Laws and Bankruptcy

Insolvency is a situation in which a person (or a corporation) in unable to pay off their debts.  Cases of insolvency may cause a legal change of the person, and lead him into bankruptcy proceedings.

Many times, a person may arrive to insolvency proceedings due to financial collapse, or due to a reality of financial hardship where the person is unable to pay off his loans.  In certain cases, after examining all of the data, the right, and recommended, step to take is enter into a bankruptcy proceeding.

Declaring a person as bankrupt may be initiated by the debtor himself, or by the creditor.  In either case, it is imperative to conducts the proceedings with a learned and experience team that specializes in bankruptcy laws, so that the debtor will have professional guidance which will ease the process, and accompany the debtor all the way through the dissolving of the debt in the shortest time possible, and allowing him to begin a new chapter in his life.

In March 2018, the Knesset approved into law the Cease Payment and Financial Rehabilitation Law, which will be valid starting on September 2019.  The law stresses a transition from disciplining the debtor to striving for rehabilitation, thus increasing the part of small creditors in dividing the debts among the State and the banks.

The law distinguishes between most debtors who have reached a point where they are unable to pay off their loans due to incorrect financial practice, or a circumstance beyond their reach (illness, job dismissal); and people who use the law dishonestly.  In order to handle those who use the proceeding dishonestly, the official receiver will be granted criminal jurisdiction.

The distinctive part of the rehabilitation approach is entering all owed parts into a proceeding of payment and rehabilitation limited to a term of four years.  At the end of the term, many debtors will receive an exemption, meaning an exemption from paying the remaining debt, and an opportunity to return to normal financial life.  With that, the law is asking to put an end to a situation where people spend years in collection proceedings, while their lives are placed on hold, and their debt only gets larger due to interest.

The law was implemented in order to achieve three main objectives:

• To bring the debtor into financial rehabilitation as a main goal, but also for the creditors, for the benefit of the economy as a whole, and advancing additional values. In example, the rehabilitation of a corporation that is in financial trouble, could keep the corporation operating, thus promising the continual employment of its workers and suppliers.
• Increasing the debt rate that will be paid off to the creditors, that make up the main populous that is affected negatively during the solvency pay off period.
• Increasing the certainty and stability of the law related to debt pay offs and the existing bureaucracy.

In our office, we have a department that specializes in proceedings of insolvency and bankruptcy.  Our office has been accompanying debtors for many years, that used our office to file for bankruptcy, and accompanies our clients through the dissolvement of the case and the return to a life without debt.

Our office provides professional guidance beginning at the decision making stage, through the filing for bankruptcy, through complete accompaniment until the final dissolvement of the case.