Debts and the uncertainty of the law
The demand for excessive legal exactness, as the desire for too much predictability in law, are clearly unrealistic and should not be considered as an option. Too many times, the legal system is arbitrary and capricious.
Nevertheless, a bankruptcy case in the State of Israel has to end between 18 to 54 months and it is not to be left to the Honorable Judge sitting on the bench whether he agrees or not to end the case – at most after 54 months the case will end and the debts will be pardoned.
Do you have any debt?
Whether it out with banks and credit card car loans, mortgages, personal loans, etc., it is more or less safe to assume that most of us carry some kind of debt. Some carry debts so high they will never be able to pay them off.
Too many consumers are victims of self-induced “debt account aversion.” Challenging the conventional wisdom that borrowers who carry multiple debts should repay the debt with the highest interest rate most quickly, the researchers discovered that the opposite is actually the prevailing norm. Instead, most people tend to pay off the smallest loan first to reduce the total number of outstanding loans, thereby achieving “a sense of tangible progress toward debt repayment.”
This is a mistake, a costly mistake, made by most people with debts, but somehow is the decision most people make – pay the small debts first.
How does debt affect us?
The truth is that any debt will probably cause some emotional effects, sometimes-serious effects, mainly because debts are about much more than just money. Being in debt can lead you to a number of psychological issues to the point of despair.
Debt affects different people in different ways and there is no “common or average tolerance of debt”. Each one of us react differently to debts we have accumulated.
Regardless of the type of debt or the amount, the debtor’s identity and nature, we can find some common emotional/psychological issues associated with debts, such as:
Debts and divorces
Debt is rough on anyone — especially when it encroaches on our family. A spouse will most probably resent (or even hate) and blame the other as a way of coping with debt. In fact, arguments about money are on the top of list “causes” of divorce.
Depression, anxiety and even health problems
It is well known from research conducted around the world that those who struggle to pay off their debts and loans are more than twice as likely to experience a host of mental health problems, including depression and severe anxiety. In addition, studies also found that high amounts of debt are associated with higher rates of stress and depression.
Unfortunately, debt and stress go hand in hand. Stress caused by debt affects the way we work, the way we perform (even sexually) and it affects every aspect of our day-to-day activities.
Stress can cause health problems or worsen the existing health issues such as asthma, obesity, allergies, psoriasis, etc.
We tend to get angry and frustrated
Being angry with others or at ourselves will not solve any problem or lower our level of anxiety and of course, it will not pay off any debt.
Debt is hard to accept regardless of our own personal journey into the red. However, it can be especially frustrating and infuriating when it was somewhat beyond your control.
Debt is especially frustrating when it was created from unforeseen events such as losing a job, losing a spouse as a result of a divorce or death, some unexpected major repair to our home or car or any other unpredictable factor.
Personally, I believe most debts in Israel were created by us when making wrong and bad decisions and not by the above factors. We are accustomed to a standard of living that we cannot afford but because there is a total lack of financial education in Israel, we still act irresponsibly acquiring debts and more debts.
Debts and Denial
Debt forming habits die-hard!
While some people feel debt weighing on them, others try to block it out. It is easy and common to be in denial about our debts. Unfortunately, no one will be able to ignore their debt completely – not for a long-term period and soon we learn that our denial only helped the piling up of more debts.
Not opening bills and bank statements that come in the mail, forgetting about them, not answering the phone when you suspect it’s a creditor, or simply choosing not to deal with the debt will not make or disappear. The delay will make the debt become a major issue in your life and sometimes the destruction of your family.
The consequences of denial
Among others, you may find yourself struggling with your utilities being shut off, eviction from your rental home or foreclosure of an owned house or apartment, your car being taken away by a court order, your bank account being frozen, your salary being frozen and of course, debts going into collection in the Otsaa la Foal.
For a new immigrant, denial can have another impact in that debt can also lead to another limitation: a ban on leaving Israel. Once a ban is in effect, it will be almost impossible to lift it without either paying the debt or complying with regulations on the subject that among others, request you to provide one or two guarantors and more.
Therefore, if you are in debt you need to get yourself out of the hole that you dug. This is the first step! Take full responsibility and stop blaming others or the system.
Everyone is happy with these debts
As absurd as it sounds, this is partially true and in fact the only ones not happy about it are those who end up paying for your debts instead of you, such as friends and family members reaching out to help you.
Banks are happy because in the end they lose very little (they write off these debts from the annual profits of the bank) and from the very beginning, we all pay for unpaid debts because part of the interest charged by the banks includes this kind of risk.
Lawyers are happy because they charge to represent you.
Solutions
Keeping debt problems as a secret will not make them go away. Therefore, share the problems with friends, family members and try to brainstorm a plan. If it doesn’t work and a solution cannot be found it is time to have a professional looking into the problem and I mean a lawyer.
The sooner the better.
