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Israel saw 38% increase in bankruptcy filings in 2020

CM 27/07/2021

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There was a 38% increase in the number of Israelis filing for bankruptcy and opening debt cases with legal aid in 2020 during the coronavirus crisis, a market study has found.

Oded Chen law firm, one of the country’s leading law firms in the field of insolvency, bankruptcy and debt cancellation, found that approximately 24,000 debt cases were opened with legal aid in 2020, of which about 9,000 were bankruptcy and insolvency proceedings of individuals.
It is estimated that about 60% of the debt cases reached arrangements for payment of the debt while writing off about 70% of the debt’s value.
Debtors took out loans; when they had difficulty covering the first loan, they took out a second loan – and then a third loan, until the financial hole became too big and the lenders stopped giving more loans.
It is clear that people whose salary is about NIS 6,000 to NIS 7,000 per month cannot repay loans of hundreds of thousands of shekels, the repayment of which is thousands of shekels a month.

Most insolvency proceedings could have possibly been prevented had the state restricted the banks in granting credit.
The estimated value of individuals’ debt cases in 2020 is NIS 7 billion.
The study also found that in the first half of 2021, there was an 18% increase in the number of individuals defaulting on their debts.
“If there had been regulation regarding the granting and limitation of credit, it would clearly have helped in a significant reduction in insolvency proceedings,” advocate Oded Chen said. “This, together with economic education and properly directing households on how to act, would reduce the number of insolvency proceedings in Israel, which are the highest in the Western world.”

Source: Jerusalem Post

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