MKs Okay Reforms to Bailiff's Office

The Knesset plenum yesterday approved in a second and third reading a bill to reform the Bailiff's Office. The new law is considered one of the most significant passed by the 17th Knesset.

The purpose of the reforms is to significantly increase the Bailiff Office's very low debt collection rate. To that end, the office will be granted expanded authorities, including the authority to suspend a debtor's driving license, to bar them from using credit cards and to search their bank, credit card, real estate and other records in order to determine their ability to pay.

But the bill also contains provisions to ease the hardship of low-income debtors, among other means by prohibiting the issuing of arrest warrants for debts of under NIS 2,000 and requiring banks to furnish alternative housing for up to 18 months to debtors forced out of their homes for failure to pay their mortgage.

In 2006 the Bailiff's Office had 2.4 million pending debtors' cases. Only about 200,000 of them - less than 10 percent of the total - were closed with the collection of the debt.

The reforms were drafted in the Knesset Constitution, Law and Justice Committee, in a process that took two years.

As part of the reform, the Bailiff's Office will be transferred from the jurisdiction of the courts to that of the justice minister.

An accelerated process will enable creditors to pursue the execution of judgment for debts of up to NIS 10,000 through the Bailiff's Office without the need for a lawyer, in a measure aimed at reducing collection costs.

In addition to giving the Bailiff's Office Registrar access to creditors' banking, bill payment and property registration records, the new law will also authorize the registrar to suspend not only their driving license and credit cards but also their passport and their ability to found a company or nonpofit association.

The framers of the law attempted to balance improved debt collection with the need to protect the basic human rights of those who are genuinely unable to pay their debts. Thus, debtors owing NIS 2,000 or less will no longer face the threat of jail. Committee chairman Menahem Ben-Sasson (Kadima) had wanted that ceiling to be NIS 10,000, but heavy lobbying from the Israel Bar Association brought the ceiling down to NIS 2,000. Two years after the law goes into effect, a two-year moratorium on all incarceration orders is to be initiated.