What a debt settlement covers
- Checking the debt: how much is principal, how much is interest and costs, and whether the amount you are asked for is right.
- An offer to the creditor based on your income and expenses, not on what the creditor would like to hear.
- A written agreement: what you pay, when, and what happens to any file or proceeding already open.
Creditors arrangement: when there are several creditors
When the debts are spread across several banks, credit companies and other creditors, it is possible to try for one coordinated arrangement with all of them, instead of putting out one fire after another.
When no agreement can be reached, the Insolvency and Economic Rehabilitation Law offers a supervised route that can end with a discharge order. Details on the insolvency and bankruptcy page.
Erasing debts: when it is possible
Erasing the remaining debts is usually possible only at the end of an insolvency proceeding, through a discharge order. In a settlement with a creditor a reduction is sometimes possible, but it is the creditor's decision and cannot be promised in advance.
Debts to the Tax Authority and National Insurance
Debts to the authorities are usually collected by the authority itself, without an Execution Office file. A payment arrangement can be requested with them too, under each authority's own rules.
If you live abroad
Most of the review and the negotiation can be handled remotely, through a power of attorney to a lawyer in Israel. A power of attorney signed abroad usually needs authentication: at the Israeli consulate, or by a notary with an apostille.
Common questions
Does a debt settlement lower the amount I owe?
Sometimes. A creditor may agree to a reduction, waive part of the interest or spread the debt, but the decision is theirs. What can be done is to come to them with the full picture and a well-founded offer.
Can I still settle after an Execution Office file was opened?
Yes. Even with an open file it is possible to reach an agreement with the creditor, and the file is then updated to match the agreement.
Do I have to come to Israel to deal with it?
Not always. Much of the work is done through a power of attorney and steady contact with you. Some procedures need documents or your participation, and that is checked case by case.
The information on this site is general information about Israeli law and procedure, not legal advice for a specific case.