Thousands of Israeli debtors struggling to repay their loans could receive salvation in the form of newly proposed debt-relief legislation.
Justice Minister Ayelet Shaked put forth a bill Sunday under which the government’s debt-collection agency will forgive the debts of those deemed to have “limited means.”
While the draft requires Knesset authorization, if passed, the Enforcement and Collection Authority will, in one fell swoop, wipe clean an estimated NIS 10 billion ($2.59 billion) in liabilities owed by 30,000-40,000 Israelis with an average debt of NIS 250,000 ($64,740) each.
According to the bill, those of “limited means” are classified as debtors who hold no assets other than their salaries, and for whom collection proceedings are unlikely to churn up meaningful benefit to creditors.
Such debtors are generally prohibited from leaving the country, using a credit card, opening a bank account and more, and are usually locked in a cycle of repaying hefty interest rates and associated expenses in lieu of the debt itself.
Those defined as debtors of “limited means” in the last five years own no assets, missed no repayments in the last three years and owe less than NIS 800,000 ($207,150) in total would have their debts expunged.
In a statement, Shaked said she hoped the bill would provide relief for thousands of Israelis who are “unable to live their lives” due to outstanding debts that linger beyond their financial means.
“For years, these people [were only able] to cover outstanding interest payments [rather than] their debt, so in fact, they will never be able to repay their liabilities, and creditors will never be eligible to receive their money,” Shaked said.
“They’re steeped deeply, as of today, in a dark cycle of poverty from which there is no escape. This revolutionary new bill will remove their debts and allow them to open a new chapter in their lives,” she said.