Judge Orders Debtor to Pay Indefinitely After Doubting His Income Claims

A 27-year-old man who accumulated debts of approximately NIS 500,000 has been ordered by a Jerusalem Magistrate's Court to pay NIS 2,000 monthly indefinitely, after the judge expressed skepticism about his reported income. Judge Ofer Yuval ruled that the young man is not maximizing his earning potential and is not providing complete and reliable information during his insolvency proceedings. The decision is not final, and the judge has ordered a review of the debtor's conduct in about a year.

The debtor, who is divorced and has a child, was previously the owner of a construction contracting company that saw revenues exceeding NIS 60 million in 2022, with pre-tax profits of NIS 2.6 million. He claimed to earn between NIS 12,000 and NIS 15,000 monthly even during the company's successful years. Currently, he states he works as a salaried employee in general labor, earning only NIS 6,000 per month, from which he must pay NIS 1,200 for child support.

The insolvency trustee and supervisor had recommended a monthly payment of NIS 3,500 for five years, based on an estimated earning capacity of NIS 12,000 per month. However, Judge Yuval opted for an unusual ruling: reducing the monthly payment amount but not setting an end date for it at this stage. The judge cited concerns regarding the debtor's vehicle, presented pay stubs, and his claim of living with a friend rent-free, concluding that he did not believe NIS 6,000 represented the entirety of his income.

"I believe the individual is acting with extreme bad faith in his conduct during the proceedings and is not providing the trustee with full and true information," the judge wrote in his ruling. He added that the individual's conduct should be examined over a longer period to set a payment order more judiciously.

Attorney Ofer Shapira, an expert in insolvency proceedings, explained that while the ruling is unusual, it does not necessarily mean the debtor will pay for life. "The judge is saying that a final plan cannot be set now, and it will be reviewed. Even if the order is not fixed, it can always be changed later. This serves as a warning for the debtor to mend his ways," Shapira stated. He also noted that the ruling sends a message to other debtors who are not cooperating with their proceedings, calling it a "warning sign for any debtor who does not cooperate, does not disclose assets, and acts in bad faith."