The state’s collection agency needs to take a lighter touch as it seeks to collect on debts, said MK Rabbi Uri Maklev (United Torah Judaism). MK Rabbi Maklev is head of the Knesset Oversight Committee, which on Wednesday held hearings on a report released last month by the State Comptroller on how the State Execution Service (Hotza’a Lapo’al) pumped up debts by imposing usurious rates of interest, in some cases as much as 10,000 percent a year.
Testifying before the committee were the heads of the Service, and many of its self-proclaimed “victims.” Among the witnesses who were present was the householder cited in the report who owed NIS 40,000 but saw her debt rise to NIS 2.3 million in just a few years, at an interest rate of 10,000 percent per year. The ridiculous debt amount was due to a typo; the interest rate was supposed to be 10 percent, but apparently an office functionary typed the wrong amount in.
According to the report, the Service on a regular basis executes judgments without informing debtors that they have done so, so the debtor has no opportunity to follow execution or pay back the debt before interest and penalties mount up. In addition, collections often take place at inconvenient times, and tax collectors enter houses at will and grab anything they can get, even necessary household appliances, computers used by debtors for their jobs, and other essential items.
Most of the debts being executed by the Service were initiated by banks and local authorities for payment of mortgages or taxes, according to the report. In 2015 alone, there were 156,000 judgments executed by the Service on behalf of local authorities to collect for back taxes, parking tickets and other debts, in which the debtor was required to pay interest rates over the top legal limit (currently 28 percent). The comptroller earlier this year brought its preliminary findings to the Service, but even with the specifics of its overstepping pointed out, the service has corrected only about half of the interest rates. Altogether, there are 750,000 open cases, many of which were problematic in some way.
“The report shows many failures in the way the Service conducts itself,” said MK Rabbi Maklev at the meeting. “Some 40 percent of collection orders are based on incorrect data, and 90 percent of the money collected consists of interest and fines, not the debt itself. This is damaging to the public. If a person couldn’t pay their original debt, how do we expect him to pay the debt, along with the many fees, fines and interest payments that are added?”
In response to the report, the Service said that many of the issues listed in the report had already been fixed, and those that had not been would soon be.