Insolvency and Economic Rehabilitation Law, 5778-2018
חוק חדלות פירעון ושיקום כלכלי, תשע"ח-2018
Published: 2018-03-15Consolidated Hebrew text as of 2026-08-02 · Last amended 2026-07-28✓ Amendment status checked against the Knesset legislation record on 2026-09-17
Premium
Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
This English text was translated from the official Hebrew using a range of translation tools, and it undergoes ongoing checks and updates. It is not a certified translation.
Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.
The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.
This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.
Chapter VIII: Economic Rehabilitation Order
Section A: Contents of the Order
Definitions – Chapter VIII§
160.
In this Chapter –
"subsistence allowance", of the individual – the amount required by the individual and those dependent on him for basic living expenses for the purpose of living in dignity, taking into account the income of his spouse and of his children who are dependent on him; the subsistence allowance shall be calculated on the basis of the dignified living standards set by the Minister under section 162(b) and their adaptation to the personal circumstances of the individual;
"earning capacity", of the individual – the individual's earning capacity from work and from any other source, calculated on the basis of standards set by the Minister under section 162(b) and their adaptation to the personal circumstances of the individual;
"obligation to make payments" – an obligation to make payments that shall apply to the individual under section 162(a);
"payment period" – the period during which the obligation to make payments shall apply under section 163.
Economic Rehabilitation Order§
161.
(a)After the submission of the Official Receiver's proposal under section 154, and after a hearing on his proposal has been held, the court shall determine, as soon as possible, in an economic rehabilitation Order that it issues, a plan for the repayment of the individual's debts and for his economic rehabilitation.
(b)In the economic rehabilitation Order, the court shall determine, inter alia, provisions on the following matters:
(1)the obligation to make payments, to be determined in accordance with the provisions of Section B: Obligation to Make Payments, including provisions regarding the amount of the payments and the payment period; however, if the conditions for granting an immediate discharge under Section C: Immediate Discharge are met in respect of the individual, the court shall order in the economic rehabilitation Order an immediate discharge of the individual;
(2)the assets to be included in the assets of the creditors' fund in accordance with the provisions of section 164, and in the case of an immediate discharge – in accordance with the provisions of section 167(c);
(3)the manner of realisation of the assets of the creditors' fund;
(4)restrictions as referred to in Section A: Restrictions, of Chapter VII, or part thereof, that shall apply to the individual for a period directed by the court, if it has found that they are necessary for the protection of the creditors or in order to prevent the individual from increasing his debts; for this purpose, it is presumed that the restrictions are necessary if the debtor meets one of the conditions for extending the payment period as referred to in section 163(c)(1) to (3);
(5)training in proper financial conduct to be undertaken by the individual, if the court has found that the circumstances that led to the insolvency indicate that such training would assist his economic rehabilitation; the Minister, with the approval of the Constitution, Law and Justice Committee, shall prescribe provisions regarding the conduct of such training;
(6)the individual's debts to which the discharge shall not apply in accordance with the provisions of section 175.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section B: Obligation to Make Payments
Obligation to Make Payments and Their Amount§
162.
(a)The court shall impose on the individual an obligation to make payments to the creditors' fund, in accordance with the following provisions:
(1)the amount of the payments shall be determined on the basis of the individual's earning capacity after the subsistence allowance has been deducted therefrom;
(2)notwithstanding the provisions of paragraph (1), if the individual has no punitive payment that is not subject to discharge under section 175(a)(1), the court may determine that the amount of the payments shall be set as a proportion of the individual's earning capacity, even if the amount remaining in his hands exceeds the subsistence allowance, if it has found that this would encourage the individual to increase his income;
(3)nothing in the provisions of this section shall derogate from the provisions of sections 303 and 311 of the National Insurance Law or from a provision in another enactment that applies those sections or that prescribes an arrangement similar to the arrangement prescribed therein.
(b)The Minister, with the approval of the Constitution, Law and Justice Committee, shall prescribe provisions regarding –
(1)the method of calculating the subsistence allowance (in this Part – dignified living standards);
(2)the method of calculating the individual's earning capacity.
Payment Period§
163.
(a)The payment period shall be three years from the date of the grant of the economic rehabilitation Order.
(b)Notwithstanding the provisions of subsection (a), the court may determine, in the economic rehabilitation Order, for reasons that shall be recorded, a payment period shorter than three years if personal circumstances justifying this exist in respect of the individual.
(c)Notwithstanding the provisions of subsection (a), the court may determine, in the economic rehabilitation Order, a payment period longer than three years if it has found that one of the following applies:
(1)in the insolvency proceedings, the individual did one of the following:
(a)acted in bad faith, with the aim of abusing the proceedings;
(b)did not cooperate with the trustee or the Official Receiver;
(c)violated the restrictions imposed on him in a manner that was liable to harm the insolvency proceeding;
(2)the individual has a debt in respect of which one of the following applies:
(a)it was created from an undertaking or from entering into a transaction of significant scope carried out by the individual at a time when he knew or ought to have known that there was a high probability that he would be unable to meet his obligations;
(b)it was created from serious neglect in the management of the individual's financial affairs, carried out in bad faith;
(c)it originates in an obligation to pay compensation under section 77 of the Penal Law, 5737-1977;
(3)the individual carried out an act as referred to in sections 219 to 221 with the aim of preferring a creditor over other creditors, diminishing assets from the creditors' fund, or concealing assets;
(4)another Order for the opening of proceedings was granted in respect of the individual in the seven years preceding the commencement of the insolvency proceedings.
(d)If the court has found that one of the conditions for extending the payment period as referred to in subsection (c)(1) to (3) applies, by reason of an act of the individual carried out in serious circumstances or in bad faith, it may determine a payment period that is not limited in time.
(e)If the court has found that special and exceptional economic circumstances exist in respect of the individual by reason of which it is not just to determine a payment period of only three years, and that this period does not bring about the appropriate balance between the creditors' right to repayment of their debt and the need for the individual's economic rehabilitation, it may determine a longer payment period even if the conditions in subsection (c) are not met.
Inclusion of the Individual's Assets in the Creditors' Fund during the Payment Period§
164.
(a)Every asset vested in the individual during the payment period shall be included in the assets of the creditors' fund, except for an asset as referred to in section 217.
(b)Notwithstanding the provisions of subsection (a), the individual's income from work or from any other source on the basis of which the payments were determined as referred to in section 162(a) shall not be regarded as part of the assets of the creditors' fund.
(c)The court may order that certain assets shall be included in the creditors' fund even if they are vested in the individual after the end of the payment period.
Transfer of Additional Amounts or Assets to the Individual§
165.
(a)The Official Receiver may authorise the trustee to leave in the hands of the individual, in addition to the subsistence allowance as referred to in section 162(a)(1), additional amounts from the individual's income from work or from any other source, required by the individual or by those dependent on him, if he has found that this is justified in the circumstances of the matter.
(b)The court may, after giving the creditors an opportunity to present their arguments, authorise the trustee to transfer to the individual amounts or assets from the assets of the creditors' fund, if they are required by the individual or by those dependent on him and the court has found that this is justified in the circumstances of the matter.
Direct Transfer of Current Income to the Trustee§
166.
(a)If the individual has not transferred a payment from among the payments by the due date, the court may, on application by the trustee, order the person who pays the individual the income from which the individual is to make the payments to transfer it, during the payment period, directly to the trustee.
(b)If the court has so ordered as referred to in subsection (a), the trustee shall transfer to the creditors' fund the payments in accordance with the provisions of the economic rehabilitation Order and shall transfer the remainder to the individual; nothing in the provisions of this section shall derogate from the provisions of sections 303 and 311 of the National Insurance Law or from a provision in another enactment that applies those sections or that prescribes an arrangement similar to the arrangement prescribed therein.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section C: Immediate Discharge
Immediate Discharge§
167.
(a)The court shall not impose on an individual whose earning capacity does not exceed the subsistence allowance an obligation to make payments, and shall grant him a discharge as referred to in Chapter IX: Discharge, immediately.
(b)Notwithstanding the provisions of subsection (a), an immediate discharge shall not be granted to an individual in respect of whom one of the conditions by reason of which the payment period may be extended under section 163(c) applies, unless special circumstances justifying this exist.
(c)If the court has granted an individual an immediate discharge, it may order that all assets vested in the individual during a period that it directs, not exceeding three years from the date of the grant of the economic rehabilitation Order, or part of such assets, shall be included in the assets of the creditors' fund, subject to the limitations in section 164(a) and (b), and the court may also, in exceptional circumstances, so order in respect of certain assets for a period exceeding three years.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section D: Implementation and Amendment of the Economic Rehabilitation Order
Implementation of the Economic Rehabilitation Order§
168.
The trustee shall act to implement the economic rehabilitation Order and shall supervise the individual's compliance with the conditions of the Order.
Temporary Removal of a Restriction§
169.
(a)The Official Receiver may, on application by the trustee or the individual and after giving the creditors an opportunity to present their arguments, temporarily remove one or more of the restrictions set in the economic rehabilitation Order, or determine that a restriction shall apply in part, if he has found that this is justified in the circumstances of the matter.
(b)The Official Receiver may make the removal of the restriction conditional on conditions that he directs, including the lodging of a guarantee.
(c)Notwithstanding the provisions of subsection (a), if the Official Receiver considers that the removal of the restriction is immediately necessary, he may remove it for a period that he determines even without having given the creditors an opportunity to present their arguments; if the Official Receiver has removed a restriction under this subsection, he shall notify the creditors thereof as soon as possible.
Amendment of the Economic Rehabilitation Order§
170.
(a)The court may, after having weighed the position of the trustee and the Official Receiver on the matter, amend the economic rehabilitation Order if the circumstances have changed or new facts have come to light, and inter alia it may –
(1)shorten the payment period if it has found that special personal circumstances as referred to in section 163(b) exist in respect of the individual;
(2)extend the payment period for an additional period or determine that the payment period shall not be limited in time, if it has found that the conditions in section 163(c) or (d) are met;
(3)grant the individual an immediate discharge if it has found that the conditions in section 167 are met.
(b)Without derogating from the provisions of subsection (a), the court may extend the payment period if it has found that the individual has not complied with one of the conditions of the economic rehabilitation Order, including if he is not meeting the obligation to make payments prescribed in the Order.
(c)Notwithstanding the provisions of subsection (a), an application to amend the amount of the payments by reason of a change in circumstances or the discovery of new facts shall be submitted to the Official Receiver, and he is competent to decide on it.
(d)An individual for whom a payment period has been determined shall not convert the payments into a single payment or into higher payments paid over a period shorter than the payment period determined in the economic rehabilitation Order, except by way of submitting an application to amend the Order to the court; the court may approve such an amendment only if it has been proven to its satisfaction that the source of the payment is not the assets of the creditors' fund.
(e)The court and the Official Receiver shall make a decision under this section after the creditors have been given an opportunity to present their arguments.
Application for Shortening of the Payment Period§
171.
(a)If a payment period exceeding three years or a payment period not limited in time has been determined for an individual, the court may, on application by the individual, at the end of three years from the date of the grant of the economic rehabilitation Order, shorten the payment period if it is satisfied that the individual has fully cooperated and has made a significant effort to maximise the rate of his debts repaid to the creditors.
(b)The court shall decide on an application submitted under subsection (a) after having given the creditors an opportunity to present their arguments and after having weighed the position of the trustee and the Official Receiver on the matter.
Trustee's Summary Report§
172.
(a)Three months before the end of the payment period, the trustee shall submit to the Official Receiver a summary report regarding the individual's compliance with the conditions of the economic rehabilitation Order, including the obligation to make payments.
(b)The trustee shall provide the individual with a copy of the report, and it shall be made available for inspection by the creditors in accordance with provisions prescribed by the Official Receiver.
Extension of the Payment Period due to Non-Compliance with the Conditions of the Economic Rehabilitation Order§
173.
(a)If the Official Receiver has found, after receiving the summary report as referred to in section 172, that the individual has not complied with the conditions of the economic rehabilitation Order and that this justifies amending them, he shall submit to the court as soon as possible and no later than the end of the payment period an application to amend the conditions of the Order as referred to in section 170, and shall notify the individual and the creditors thereof.
(b)If the Official Receiver has submitted to the court an application to amend the conditions of the economic rehabilitation Order under subsection (a), the payment period shall be extended until the court's determination of the application, which shall be given as soon as possible.
(c)If the court has rejected the Official Receiver's application submitted under subsection (a), it shall order the trustee to return to the individual the payments and assets transferred to the creditors' fund during the extension period under subsection (b), unless it has found that there is justification for refraining from such return in the circumstances of the matter.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Read the entire law on one page — continuous text, no page breaks, plus PDF downloads.