If you cannot repay your debts in Israel, the law provides an orderly, dignified way out. This guide explains insolvency and economic rehabilitation from start to finish — in plain English.
What insolvency really is
Insolvency is the legal state of being unable to pay your debts as they fall due. Since 15 September 2019, Israel handles it under the Insolvency and Economic Rehabilitation Law, 5778–2018, which replaced the old Bankruptcy Ordinance. The law’s declared goal is twofold: the debtor’s economic rehabilitation and a fresh start, alongside fair repayment to creditors. Rehabilitation — not punishment — is at the centre.
Who is it for?
The process is built for honest people who genuinely cannot repay — after a business closure, divorce, illness, a drop in income, or personal guarantees that were called in. It is not a moral failing; it is a mechanism the State created so that people can return to normal economic life.
The two tracks
The law sets two tracks by the size of the debt. Smaller debts are handled before the Registrar of Execution at the Enforcement and Collection Authority; larger debts go to the District Court, accompanied by the Commissioner of Insolvency and Economic Rehabilitation at the Ministry of Justice. The monetary threshold is updated from time to time, so it is worth checking the current figure for your case.
How the process unfolds
An opening order freezes creditors and attachments immediately. A trustee is appointed, your assets and income are reviewed, and a repayment plan is set according to your real ability — not the size of the debt. After a period of compliance and good faith, the court grants a discharge that erases the remaining debts.
Good faith — the key condition
Transparency and full disclosure are the central condition for a discharge. Hiding assets, transferring property to relatives before the process, or running up debt you never intended to repay can delay or defeat the discharge. Honest conduct, by contrast, is what carries you to the fresh start.
Frequently asked questions
Will I lose my home?
Not necessarily. The law provides housing protections for the family home, and the outcome depends on the circumstances. Good legal handling protects what can be protected.
Which debts cannot be wiped?
Non-dischargeable debts include child support, fines, and debts created by fraud. Most ordinary debts — loans, banks, authorities and suppliers — can be discharged.
Do you assist English speakers and olim?
Yes. We guide English-speaking residents and new immigrants through the entire process, with fast responses by phone and WhatsApp.
Official sources
- Commissioner of Insolvency and Economic Rehabilitation — official site (Ministry of Justice)
- “Mamo-Net” — online applications to the Commissioner (Ministry of Justice)
- Kol-Zchut — Insolvency and Economic Rehabilitation (Bankruptcy)
Have a question about your situation?
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