A new study by the Enforcement and Collection Authority, which examined the impact of the corona crisis on the entry of new debtors into the enforcement system, found that 31% of new debtors testified that the main reason they incurred debt was due to misconduct and 15% indicated a crisis The corona as a reason for the formation of debt
A new study by the Enforcement and Collection Authority examined the effect of the corona crisis on the entry of new debtors into the enforcement system: The aim of the study was to examine how the corona crisis affected the movement of debtors, with emphasis on new debtors,
The assumption at the beginning of the work that the corona crisis has led to the opening of new cases against debtors who were not previously debtors in execution. For this purpose, the amount of new debtors that was added during the corona crisis was examined, including debtors who were previously debtors in execution and returned during this period.
The study period, which was chosen to examine the impact of the economic crisis, began on July 1, 2020, about a month from the first closure, and lasted until the end of 2021. The study was made up of two parts: one, statistical theory of debtors’ movement in the execution system Performed on the new debtors.
The study examined three patterns of debtors: existing debtors, new debtors and recurring debtors.
It was found that a quarter of the new cases that were opened during the Corona crisis, were opened to new debtors with an average debt of about NIS 3,000. Most new and returning debtors held one portfolio on average. It also turned out that about half of the new debtors who entered during the crisis, had already left the execution system by the end of 2021.
It was found that from the subjective point of view of the new debtors and their perception of the debt, most of the cases opened to the new debtors were opened by banks and business companies, and most of the debts were opened due to private debts (personal failure) and not business debts.
About one-third (31%) of new debtors testified that the main reason they incurred debt in execution was due to misconduct and only 15% of them pointed to the corona crisis as the reason for the debt formation.
However, about 65% of respondents responded to the telephone survey because the corona crisis greatly to a very large extent affected the opening of the procedure. In contrast, 29% of debtors surveyed responded that the corona crisis had little or no effect on their entry into enforcement proceedings.
More than 70% of the new debtors testified that the debt even clouded them on a daily basis, and those of them who approached the creditor to help them reach a settlement, claimed that the creditor showed no desire to help, despite the crisis.
An examination of the data found that the main entanglements during the crisis were actually existing debtors and recurring debtors. The number of cases opened against existing debtors was the largest among the types of debtors, and the percentage of cases they were able to close was low. As a result, the possibility of an existing debtor to exit the enforcement system and close his debts was also the lowest. As for recurring debtors, it was found that less than 10% percent of these debtors managed to exit the execution system at the end of 2021.
In contrast, about half of the new debtors, who first entered the execution system during the Corona crisis, and to whom a relatively large number of cases were opened, were not left as debtors in the execution system as early as the end of 2021.
The main conclusion that emerges from the study is that the corona crisis did not lead to over-entanglement of debtors in the execution system, at least not during the study period. The small increase in the number of new debtors during this period was imperceptible, since most of these debtors left the execution system within a year or so. The new debtors created average debts of about NIS 26,000 and half of them even debts lower than NIS 3,000. Since the debts of the new debtors were lower than the debts created by the existing and recurring debtors, and since this was a pattern of random debtors, it was easier for the new debtors to get out of the execution system in a shorter time.