In a first-ever study of individual bankruptcies in Israel, researchers at Hebrew University found that the largest number of bankruptcies were of residents of peripheral areas and small towns in the north and south – with Eilat leading by far with the highest number of bankruptcies reported. In that city, 4.9% of residents declared personal bankruptcy between the years 2006 and 2015. Also high on the list of bankruptcy filings were Nof Galil (Upper Nazareth), where 3% of residents declared bankruptcy during the period, as well as Bat Yam (2.9%), Teveria (2.8%) and Akko (2.7%). The lowest bankruptcy rate was in Yerushalayim, where the rate was only 0.46%, followed by Elad (0.57%), Beit Shemesh (0.58%) and Bnei Brak (0.63%).
The vast majority of bankruptcy requests – 97.5% – were from individuals who sought to come to settlements with multiple creditors. Under bankruptcy protection, these individuals make payments to the court, which distributes payments to creditors under the terms of the bankruptcy settlement agreed to by all parties involved. Of those seeking bankruptcy protection, 8% were independent business people, while 57% were salaried individuals and 35% were dependent on government grants for their income. Workers in the construction business were the most likely candidates for bankruptcy, more than 2.5 times more likely to seek protection than the average Israeli, the study found.
Israelis who declared bankruptcy may find immediate relief from creditors – but the researchers found that those who sought protection opened themselves up to higher rates of illness, divorce and even death. Such events were 23% more likely to occur among bankrupt individuals within the first five years of their seeking protection as for the general population.
The researchers also found that the cities with the lowest bankruptcy rates also happen to be cities with large concentrations of chareidim. Speculating on why that might be, the researchers said that it was possibly because of the chessed efforts in these cities, in which individuals who got into financial trouble could avail themselves of resources such as gemachim and other assistance.