The Knesset approved a “drop law” that allows the forgiving of loans that are subjected to collection of people with restricted means, who are unable to repay their debts to creditors. Thanks to the law, which will be in affect beginning on September 5, 2015, debtors will be able to submit a request directly to the office of collections asking for their debts to be forgiven. The law was submitted already during the previous administration, and was promoted in the current administration by M.K. Ayelet Shaked.
A debtor who is interested in having his debts forgiven must abide the following eligibility conditions:
- A debtor who’s been in the process of debt consolidation during the past four years
- A debtor who is declared as with restricted means
- The total debt is under 800 thousands NIS (including debts that are not in consolidation)
- The debtor fulfilled his debt consolidation arranged for him by the collection office in the past 3 years
The law was implemented to help the at-risk population, that has been facing collections for many years, and have been assigned monthly payments that doesn’t cover the monthly interest. In addition to that, for a period of several years, the debtors have had to face different sanctions, such as: opening a business, restricted bank accounts, and stay of exit.