Israel to Form Panel to Set Standard for Post-bankruptcy Living Wage

Knesset panel will determine the amount needed for living in dignity, as current amount is based on disability allowance

Or Kashti
Or Kashti
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National Insurance Institute office in Jerusalem, July 2020.
National Insurance Institute office in Jerusalem, July 2020.Credit: Ohad Zwigenberg
Or Kashti
Or Kashti

A new interministerial committee is to determine the standards for calculating allowable living expenses for bankrupts that will permit them to “live in dignity.” Justice Minister Avi Nissenkorn and Social Affairs Minister Itzik Shmuli announced the formation of the committee Monday.

Four months ago, the Justice Ministry issued a ruling on the issue that used the highest level of disability allowance awarded in Israel as a basis. The ruling violated a 2018 law and the report of a public commission that prompted its enactment.

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The decision to appoint a new committee is the second such effort, after the Justice Ministry adopted the recommendations of the 2016 commission, headed by Prof. Ron Harris of Tel Aviv University. They included the demand that the bankrupt and their family be allowed “to continue to live in proper conditions,” which served as a basis for the Bankruptcy and Economic Rehabilitation Law of 2018.

The law states that the amount of debt repayment after bankruptcy will be set according to “the earning potential of the individual after deducting a living allowance from it.” This amount is defined as the sum needed for “basic living expenses for living in dignity.” But the Justice Ministry evaded its duty to determine the amounts needed for living in dignity, and decided to base it on an amount equal to the disability allowance.

Nissenkorn announced the formation of the new committee in the Knesset, in response to a parliamentary question submitted by MK Nitzan Horowitz, the chairman of Meretz.

The committee will be chaired by the director-general of the Justice Ministry, Sigal Yakobi, and will include representatives of the Enforcement and Collection Authority (formerly known as the Bailiffs Office), the legal aid office and the Counseling and Legislation Department of the Justice Ministry, along with representatives from the Labor and Social Affairs Ministry.

The committee is supposed to make its recommendations on updated regulations for the calculations within two months, but it will be able to approve the temporary regulations set in the regulations for setting the monthly amounts to be paid by the debtors, issued by the Justice Ministry.

“The obligation on a bankrupt person to pay their debts cannot harm their fundamental right to live in dignity,” said Nissenkorn. The calculation of this amount is intended “to prevent damaging these most basic rights,” said Shmuli.

The National Insurance Institute said it views in a positive manner placing the issue of a minimum level for dignified living on the national agenda. “In the same way that we contributed to the previous committee that discussed the issue, we will be happy to participate in the new committee,” said the NII.

But a government official with in-depth knowledge of the details involved said the new committee looked to be “an attempt to bury the recommendations of the Harris committee.”

Becky Cohen-Keshet, a lawyer with Rabbis for Human Rights, said: “We have come a long way in understanding that a debtor is not an immoral person, or as long it has not been proved otherwise, he is trying to cheat everyone.” The new committee “needs to address the person, family and their needs and no less important – the reality in which we are living. It must look at, among other things, the existing job market, the need to deal with children and parents, gender differences and mainly to provide a human and respectful view of the people in debt.”

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