Bill proposes debt-collection cut off after 3 years

In January, Shaked proposed an overhaul of the bankruptcy system for both individual and corporate debtors.

May 15, 2016 19:26
2 minute read.

Shekel money bills. (photo credit: REUTERS)


Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief


Continuing a trend to make debt collection both more efficient and more humane, Justice Minister Ayelet Shaked on Sunday proposed a bill to set a definite three-year deadline for government agencies to engage in debt collection.

The Attorney-General’s Office had issued guidelines in recent years to get agencies to comply with the three-year deadline, but passing a clear law on the issue will make the deadline clear and mandatory, said Shaked.

Be the first to know - Join our Facebook page.

She explained that the bill will end the absurd scenario where national or local government agencies wait up to seven years after obtaining a judgment and collection order to collect a debt, at which time the debtor-citizen no longer remembers the details of the issue.

This means the debtor often cannot defend himself in case the agency is mistaken and the issue may be sprung on him at a more vulnerable time when he thought the issue was long since resolved.

Further, some agencies have practiced “passive debt collection” in which they wait until a citizen needs some critical service and then pounce on him to collect before granting the otherwise standard service.

However, the bill is not only about canceling debt.

A three-year deadline instead of seven will also encourage agencies to move faster to collect on debts due them, which may raise the collection rate and increase state revenue.


Also, if the state moves faster to collect, it may still offer citizens a chance to pay over an extended period, but with the debtor having full awareness of what he owes, avoiding a sudden crisis.

Finally, the legislation will clarify that the three years applies in all cases, to clear up confusion regarding a separate rule that says that certain court rulings can be enforced for 25 years.

The bill is consistent with a trend of bills during and even before Shaked’s tenure aimed at modernizing and improving the standing of debtors in Israeli society in light of socioeconomic changes and analyses of the failures of the current system.

In January, Shaked proposed an overhaul of the bankruptcy system for both individual and corporate debtors.

The overhaul aimed to remove the stigma of filing for bankruptcy so that debtors do not sit indefinitely in limbo in the collection system for debts that they have no hope of paying.

It also was directed at helping individual and corporate debtors to turn over a new leaf or even salvage profitable aspects of corporate operations, while dividing a debtor’s assets more equally among different categories of creditors than in the past.

Earlier related reforms lowered the fees for poor persons to access the court system to defend their rights.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

September 19, 2018
Putin sees chance circumstances behind downing of Russian plane near Syria