Israeli Household Debt Surges, Home Foreclosure Risks Explained

Household debt in Israel continued its upward trend in the first quarter of 2026, reaching approximately 914 billion shekels, an increase of about 10 billion shekels. This growth was driven entirely by housing debt, which now stands at around 663 billion shekels, while non-housing debt remained largely unchanged.

Despite the rising debt, owning a home does not automatically mean it will be sold if a household faces financial insolvency. Attorney Yosef Weitzman, an expert in insolvency and asset liquidation proceedings, clarifies that the common fear of immediate home sale upon entering such proceedings is often unfounded. While a home is a significant asset, its sale requires court approval and is not automatic.

The Israeli law on insolvency and economic rehabilitation specifically addresses residential properties. Section 229 mandates court approval for selling a home during insolvency proceedings, allowing debtors and creditors to present their arguments. Courts weigh the benefit to creditors against the hardship to the debtor, explore alternative debt repayment methods, and consider the provision of suitable alternative housing.

Weitzman emphasizes that assessing a home's equity requires a thorough analysis of its market value minus outstanding mortgages and liquidation costs. A property valued at three million shekels with a 2.4 million shekel mortgage does not yield three million shekels for creditors. He advises that understanding the numbers, property value, secured debt, net proceeds after liquidation, and alternatives, is crucial for determining a home's actual risk.

Even when significant equity exists, selling the home isn't the only solution. Options like securing funds from family or third parties, negotiating with creditors, or arranging alternative payment plans can allow families to keep their homes while satisfying creditors. Weitzman stresses that the goal is not to guarantee a home's safety but to explore all avenues for a resolution that benefits both parties. He also notes that a homeowner current on mortgage payments but facing other debts is in a different position than someone defaulting on their mortgage. Early assessment of financial and legal situations is key to maximizing available options.