How Israel Drives Debtors into Poverty

Dear friends,

 

Someone gets up in the morning and realises that their bank account has been frozen without warning, because they owe the municipality a few hundred shekels’ debt.  A single mother tries to weigh which debt to pay first: Council fees or electricity? A 54 year old man fired from his job hasn’t been able to find new work and has accumulated a number of debts. Unable to pay, his debts accrue interest and fines and he sees no way out.

 

Against the background of Israel’s economic policy in recent decades, debt has become one of the major problems facing Israelis. Being in debt is especially difficult for people who are living in poverty –as debts quickly accumulate interest, fines and collection costs – and become so large that it becomes impossible for families to exit the cycle of poverty. Debt seriously jeopardizes the fundamental rights of debtors and their families to live with dignity, shelter, food, security, health, and education.

 

Of course debts must be paid, and the authorities and creditors have the right to collect these debts. At ACRI we hold that the obligation of the creditor to collect the debt must be balanced with debtors’ right to live in dignity. Israel’s debt collection system has not found the proper balance. The asymmetry of power between the creditors and the debtors is enormous. The debt collection is often contracted out to private companies; drastic actions are often taken, often without judicial oversight, without an appeals mechanism, without effective supervision and without taking into account the debtor’s personal circumstances.

 

What can be done? We have several recommendations. Our latest report, written by Attorney Reut Cohen, reviews the failures of Israel’s debt collection system and offers solutions for legislative and policy reform. One of our main recommendations is to repeal the restrictive law from 1929, called the Tax Ordinance (Collection); which gives collection authorities harmful and far-reaching powers. Together with MK Merav Michaeli, we wrote a bill to repeal the law. We hope that the bill will receive support and be a significant step towards regulating debt collection, so that debtors can live with dignity, repay their debts and rebuild their lives.



Yours,

 

Sharon

 

For more information: Read Attorney Reut Cohen’s article in The Marker.