Poor Israelis may find relief in new bill aimed at negating debt

The Ministerial Committee for Legislation approved Sunday a bill that would move to erase the debts of thousands of Israelis who have been deemed “economically disadvantaged” and have failed to pay back their debts for at least five years.

The bill, put forward by Justice Minister Ayelet Shaked and labeled the Debt Relief Bill, stipulated that the state will have the prerogative to erase debts as high as 800,000 shekel (roughly $207,152) to individuals who meet a set of pre-defined criteria laid out by the bill. Their creditors – Israel’s tax authority as well as private entities – will be informed of the state’s intention to negate the debt and will be given an opportunity to appeal.

According to the Justice Ministry, an estimated five billion shekels in debts will be canceled during the bills first year. After clearing the ministerial committee, the bill must now pass through the legislation process, going to the Knesset for its first reading, and, should it pass, continue on to its second and third reading.

The bill stipulates that debtors who have managed to make back payments on their debt in the three years preceding their request for the benefit, and are considered “economically disadvantaged” for the past five years, will receive a onetime debt negation. The benefit will be enjoyed only by those who owe up to 400,000 shekel ($103,576) to private entities or the tax authority and with an overall debt lower than 800,000 shekel (roughly $207,152).

According to assessments, there are in Israel somewhere between 30,000-40,000 individuals who fit the criteria, with an average debt of 250,000 shekels ($64,735). The law is being billed as a temporary order which will stand for three years, and as a precursor for a wider reform in field.

Source: http://www.haaretz.com/news/israel/1.660025

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