A bankrupt person is subject to various restrictions on economic activity, such as a ban on the use of checks and credit cards. However, there are areas in which it is very difficult to manage without checks, especially in the area of rent or education – for example, payment to private educational frameworks such as kindergartens. Israel's Bank guidelines outline a procedure for removing restrictions on debtors, but in practice they are hardly implemented because they pose inherent barriers to their use. For example, The procedure of the Insolvency Commissioner requires the prior consent of the bank as a condition for discussing the request to remove restrictions. In addition, in many cases, banks refuse to issue checks to customers even after a court orders that the restriction be removed from their accounts.
As a result, only a very small percentage of debtors' requests to remove restrictions on the use of checks are accepted. For example, according to data received by ACRI (Hebrew), in 2024 only 5 out of 24 applications submitted in the Tel Aviv District were received, one out of 14 applications submitted in the Beer Sheva District, and even one out of 19 submitted in the Haifa District. This is not only a low rate of acceptance of applications but a small percentage of applications submitted in the first place, and within all of them, the applicants were represented. This data also indicates the barriers faced by debtors in Israel, who are unfamiliar with the procedure and the various options available to them, particularly in matters of removing restrictions on essential activities.
On July 2, 2024, ACRI sent legal correspondence (Hebrew) to the Bank of Israel and other entities, together with the Human Rights Clinic in Civil Proceedings at the Faculty of Law at the University of Haifa, demanding a change in the procedure for handling debtors' requests to remove restrictions on issuing checkbooks. Attorneys Reut Cohen of the Clinic and Maskit Bendel of ACRI noted that the current state of affairs violates human rights, undermines the rationale of effective debt repayment, economic rehabilitation and protection of the rights of debtors and their families – including denial of the right of access to the courts. Thus we requested:
Instruct the banks that following a judicial ruling, that examined the customer's situation and removed restrictions on the use of checks, they cannot refuse to issue them.
Except for a clear instruction that issuing a checkbook is an integral part of managing a current account, and therefore refusing to issue checks for essential purposes such as paying rent or paying for educational frameworks is unreasonable.
Add the issuance of checks for essential purposes to the list of services that a bank must not unreasonably refuse to provide.
Amend the Supervisor's procedure and cancel the requirement to obtain the bank's prior consent as a threshold condition for discussing a customer's request to remove restrictions on issuing checks.
On September 18, 2024, we received a response from the Ministry of Justice stating that, in light of our request, the procedure for the Insolvency Commissioner has been revised. As a result, prior approval from the bank will no longer be necessary to consider a customer's request for check issuance.