Execution Office Payment Order

When debts pile up and warning letters from the Execution Office start arriving, the sense of suffocation can be paralyzing. However, the Execution Office system was not designed only to impose sanctions and enforcement measures on debtors, but also to allow them to return to a normal life. An Execution Office payment order is one of the most important legal tools available to people who have accumulated debts in various files. A payment order allows the debt to be spread over monthly payments according to the debtor's financial ability, thereby stopping harsh financial sanctions.

Table of contents

• What is an Execution Office payment order?
• Applying for an Execution Office payment order
• Means examination at the Execution Office
• How is the payment order determined?
• Paying under a payment order
• Changing a payment order
• Debt arrangement at the Execution Office
• Execution Office "paying debtor"
• Reducing an Execution Office debt
• What to do when there are several Execution Office files?
• Payment order or insolvency
• In which cases can an Execution Office lawyer help?
• Frequently asked questions about Execution Office payment orders

What is an Execution Office payment order?

An Execution Office payment order is a judicial decision of the Execution Office registrar that allows the debtor to spread the debt over fixed monthly payments. This tool is designed to bridge the creditor's right to receive the money owed to them and the debtor's financial inability to repay it all at once.

Who is a payment order suitable for?

A payment order suits any individual debtor (a private person or a licensed sole proprietor) who has fallen into debt and cannot repay it in full immediately, but who on the other hand has a stable source of income that allows them to pay a fixed amount every month. The payment order is intended mainly for debtors with rehabilitation potential (who are not in a situation requiring them to enter insolvency proceedings) and for debtors who wish to protect their assets from realization by the Execution Office.

In which cases is it worth requesting a payment order?

- When the Execution Office file is opened: when a debtor receives a warning after the file is opened and immediately applies for a payment order, this prevents the creditor from imposing new sanctions and attachments.
- Consolidation of files: when several files are being conducted against the debtor, consolidation of files and a comprehensive payment order can be requested, provided the debtor meets the conditions of the law and can repay all the debts within the periods it sets (otherwise the solution is insolvency proceedings).
- Deterioration in financial situation: someone for whom an arrangement or payment order has already been set but whose financial situation has worsened can submit an urgent application to change and reduce the payments.
- Removing existing attachments: applying for a payment order, combined with an application for a stay of proceedings, is one of the ways to request the cancellation of attachments imposed on the debtor.

Applying for an Execution Office payment order

Submitting an application for a payment order has great legal significance. It is a procedure in which the debtor must convince the Execution Office registrar of their true financial ability, so the way the application is submitted and the documents attached to it are very important.

Which documents should be attached to the application?

The application is submitted using Form 233 ('Debtor's application for a payment order'), and the registrar decides it on the basis of the details and supporting documents attached. The debtor must set out, with full transparency, their current financial situation together with supporting documents (pay slips and profit and loss statements, confirmation of allowances, bank account statements, a breakdown of credit charges, and receipts for basic living expenses such as rent, municipal tax, ongoing bills and education).

What monthly amount can be offered?

The Execution Law, 5727-1967, provides that the debtor must offer a realistic amount that matches their "disposable income", while also complying with the limits on spreading the debt.

Calculating disposable income –

The amount left each month after deducting basic, essential living expenses from the family's total income.

Time limits –

The law sets maximum, binding spreading periods (two to 4 years, depending on the size of the debt). If the debtor's proven ability does not allow them to repay the debt within these periods, the registrar has no authority to grant a longer spread without the creditor's consent, and the legal solution in such a situation is to turn to insolvency proceedings.

Immediate interim payment –

From the moment the application is submitted, the debtor must start paying the offered amount every month, even before the registrar has decided the matter. Failure to pay the offered amount on time will lead to the application being dismissed outright and to collection proceedings being taken.

How is the debtor's financial situation presented?

Presenting the debtor's financial situation includes three mandatory components combined in the form:

1. A detailed, complete questionnaire about the income, expenses, assets and debts of the debtor and their household.
2. A waiver of confidentiality allowing the registrar to run queries to verify the information against databases and financial bodies.
3. An affidavit duly signed and verified before a lawyer, setting out the circumstances of the financial difficulties"`

Means examination at the Execution Office

As part of an application for a payment order, the debtor undergoes a means examination at the Execution Office. This examination is a supervision and inquiry tool available to the registrar, designed to examine the debtor's true financial situation and determine whether they really cannot pay the debt in full or are trying to evade paying their debts.

When is a means examination required?

The Execution Office registrar can carry out a means examination on their own initiative at any time to examine the debtor's financial ability. A means examination can also be carried out at the initiative of the creditor, who may ask the registrar to carry it out at any time. The creditor's aim is to show that the debtor is able to repay the debt, in order to refute the debtor's claim that they cannot do so. The debtor can also initiate a means examination if they do so within the period set in the warning. Also, in cases where the registrar declares the debtor to be evading their obligations, or where the registrar refuses the debtor's application to spread the debt over payments, the debtor may request a means examination.

What does a means examination check?

A means examination checks the full financial picture of the debtor's family unit. The registrar examines the debtor's earning potential and capacity to work, standard of living and expenses versus income, and financial rights such as provident funds, study funds, real estate or inheritance rights. Beyond that, the registrar checks whether the debtor has additional external debts, such as loans from the grey market or from banks.

Execution Office means examination questionnaire form

In practice, the means examination stage begins with filling in Form 529 (formerly Form 21) called "Questionnaire and waiver of confidentiality". This is a comprehensive questionnaire that includes a detailed legal declaration of all the income, assets, accounts and expenses of the debtor and their household. The waiver of confidentiality allows the Enforcement and Collection Authority to request and receive data directly from government and financial bodies in order to obtain the full picture.

How does the means examination affect the payment order?

In fact, the results of the means examination decide the fate of the file and ultimately determine what the payment order will look like. If the debtor presents a credible picture backed by documents, the registrar will set a payment order matching their ability. Where the registrar is persuaded that the debtor cannot repay the debt within the spreading periods defined by law (up to two to 4 years, depending on the size of the debt), the registrar will refer the debtor to open insolvency and economic rehabilitation proceedings (since the institution of the 'debtor of limited means' has been abolished).

Where it is discovered during the examination that the debtor lied in the questionnaire or concealed income, the registrar may reject the application and even impose severe restrictions on the debtor (such as a stay of exit from the country or restriction of a driving license) for being an "evading debtor".

How is the payment order determined?

The payment order is a combination of an accounting check and the judicial discretion of the Execution Office registrar. The registrar must find a balance between the creditor's right to receive their money and the debtor's right to live with dignity.

How is the monthly payment amount determined?

The monthly payment order is based on the disposable income formula. This weighs two main parameters – the family unit's total income and its essential, basic living expenses.

The Execution Office registrar deducts the essential expenses from the income. The remaining amount is defined as disposable income, and the monthly payment is derived from it – provided it allows the full debt to be repaid within the spreading periods set by law (two to 4 years). Is the amount offered by the debtor binding on the Execution Office registrar?

The amount the debtor offers in the application for a payment order is a recommendation only. The Execution Office registrar has broad judicial discretion and may accept the offer, increase the amount or even reject the application entirely where the debtor has not acted with full transparency.

What can be done if the application for a payment order was rejected?

If the registrar rejected the application for a payment order or set a payment order too high for the debtor to keep up with, the debtor has several options.

· An application for reconsideration if there has been a material change in circumstances (dismissal or illness) or if significant new documents have come to light.
· An application for leave to appeal to the court within 20 days of receiving the registrar's decision.
· Examining the insolvency track.

Paying under a payment order

From the moment the registrar decides on a payment order, the debtor has a legal obligation to comply with it. A debtor who fails to pay exposes themselves to further attachments and restrictions.

How are the payments made?

Once the payment order has been set, the debtor must pay the amount every month on the date set for them. Payments can be made by standing order from a bank account or credit card, online through the personal area on the Enforcement and Collection Authority website, at the Postal Bank or through the telephone call center.

What happens if you pay more than the set amount?

The debtor can pay more than the amount set in the payment order. Overpaying will shorten the repayment period and save on interest and linkage differentials.. Beyond the financial significance, overpaying also makes a positive impression on the Execution Office registrar, since an increased payment indicates a genuine wish to repay the debt.

What happens if you do not comply with the payment order?

Failure to comply with the payment order (even missing a single payment) is considered a serious breach of a judicial decision. Such a step strips the debtor of the legal protection of a "paying debtor", and they immediately lose the interest benefits granted to them. Moreover, non-compliance with the order creates a presumption that the debtor is a 'debtor with means who is evading payment of their debts', which allows personal restrictions to be imposed (such as a stay of exit from the country, restriction of a driving license and designation as a special restricted bank customer) alongside the renewal of attachments. In child support files, non-compliance with the order may even lead to an imprisonment order being issued against the debtor.

It is worth noting that in certain child support debt files, non-compliance with the payment order may lead to an imprisonment warrant being issued against the debtor.

Changing a payment order

The Execution Law recognizes that a person's financial life changes from time to time. As a result, the amount of the monthly repayment can be adjusted to life circumstances if a material change has occurred.

When can a reduction of the monthly payment be requested?

An application to reduce a payment order can be submitted where there has been a material change for the worse in the person's financial or personal situation. For the application to be accepted, the material change in circumstances must be proven and backed by supporting documents, provided that the reduced amount still allows the debt to be settled within the maximum spreading periods in the law (otherwise the debtor will be referred to insolvency proceedings).

What happens when the debtor's financial situation changes?

A change in the debtor's financial situation does not automatically change the payment order. When the debtor's financial situation changes, the responsibility to act lies with them.

In the event of a change for the worse in their financial situation (dismissal, illness, etc.), the debtor must submit an application to change the payment order (Form 233). If they stop the payments, they will be considered in breach of the order and risk attachments and restrictions.

In the event of a change for the better in their financial situation (a pay rise, an inheritance, etc.), the law requires the debtor to act in good faith and report their financial ability accordingly. The creditor may also apply to the registrar at any time and ask to increase the payment order if they discover that the debtor's financial situation has improved.

Which documents should be attached to an application to change the order?

Apart from the reasoned application form (Form 233), all the documents and supporting evidence proving the change in circumstances must be attached. Among other things: a dismissal letter, pay slips showing a drop in earnings, medical documents showing illness, an accident or loss of working capacity (where relevant), proof of an increase in essential expenses and bank current-account statements for the last three months.

Debt arrangement at the Execution Office

A debt arrangement is a legal arrangement between the debtor and the creditor, signed outside the walls of the Execution Office.

Execution Office payment arrangement

As part of the arrangement, the parties voluntarily agree on how the debt will be settled and how the attachments and restrictions will be removed. For the arrangement to bind the Execution Office system and lead to a stay of proceedings or removal of attachments, it must be submitted to the Execution Office registrar to be given the force of a judicial decision.

Spreading a debt at the Execution Office

Spreading the debt is the way the debtor's monthly payments will be made over time. The debt can be spread in two tracks –

Payment order – spreading the debt by a judicial decision of the Execution Office registrar, according to the limits and criteria set by law.

Agreement with the creditor – the creditor agrees to a longer, more convenient spreading of the payments than the law allows the registrar to grant.

Execution Office payment schedule

This is the practical mechanism through which the spreading of payments is implemented. The payment schedule is set in advance in a way that defines exactly how much money the debtor must pay each month, on which dates and through which payment channels.

What is the difference between a payment order and a debt arrangement?

A payment order allows the debtor's debt to be spread through a decision of the Execution Office registrar. This is in contrast to a debt arrangement, which is made by voluntary agreement between the debtor and the creditor.

Another difference concerns disclosure of the debtor's financial situation. With a payment order, the debtor must undergo a full means examination and present their full financial picture. In a debt arrangement, by contrast, there is no obligation to disclose financial data to the Execution Office registrar.

Moreover, while the registrar has no authority to write off part of the debt as part of a payment order, in a debt arrangement the creditor may agree to a discount on the debt and to writing off part of it in return for quick payment.

Another difference concerns the timetable: the payment order is subject to the limits of the Execution Law, whereas a debt arrangement is completely flexible and the parties can agree to spread the debt over any period they wish.

Execution Office "paying debtor"

An Execution Office debtor who pays their debt under a payment order can apply to be recognized as a "paying debtor". Acceptance of this application means a stay of some of the collection proceedings (salary attachment, bank account attachment, attachment of movables and realization of a vehicle attachment).

What is recognition as a paying debtor?

One of the main and most significant amendments to the Execution Law was designed to encourage debtors to take responsibility, cooperate with the system and settle their debts, through incentives and relief for those who keep up the payments set for them.

Recognition as a "paying debtor" is an official legal status given to an Execution Office debtor who meets their obligations. The meaning of this designation is a move from the status of a "debtor with means who is evading payment of their debts" to that of a debtor cooperating with the system, which gives them a legal protective umbrella and financial benefits.

What are the conditions for recognition as a paying debtor?

To be recognized as a "paying debtor", a debtor must meet one of the following conditions:

· Has made three consecutive payments under the payment order.
· Has made a first payment under a 'payment order by director's directive' (the payment spreading table included in the warning form for debts not exceeding 100 thousand shekels).

How does recognition affect collection proceedings?

Acceptance of a "paying debtor" application gives the debtor major advantages. First, a dramatic reduction in arrears interest (of up to 25% of the interest component added to the debt), and second, blocking of proceedings and sanctions by the creditor.

Reducing an Execution Office debt

Many debtors face the fact that Execution Office debts tend to swell because of interest, linkage and fees. The Execution Law offers legal mechanisms that allow the debt balance in the file to be reduced or updated.

Reducing a debt at the Execution Office

Debt reduction is an action carried out within the Execution Office system that lowers the debt balance recorded in the file. The action can be carried out following a report of payments made directly to the creditor or as a result of a registrar's decision ordering a reduction of certain components of the debt.

Lowering a debt at the Execution Office

The Execution Office registrar can exercise their authority and deduct amounts from the file. Usually, this mainly involves reducing the creditor's lawyer's fees, cancelling fees imposed unjustly or significantly reducing arrears interest accumulated over the years.

In which cases can the debt balance be updated or reduced?

Direct payment to the creditor

If the debtor paid money directly to the creditor and not through the Execution Office cashier, the creditor must report this within a week using a debt reduction application form. Where the creditor has not reported receiving the payment, the debtor may ask to reduce the debt themselves.

"I have paid" plea

If the debtor claims that they repaid the debt or complied with the judgment after it was given, they may file an application on an 'I have paid' plea. The registrar may accept the application in full and close the file, or reduce the debt.

Delay in collecting the debt

Where the creditor opened the Execution Office file against the debtor but did not take collection actions over the years, leading to interest accumulating in the file, the debtor may ask to reduce the interest accumulated during the period of delay.

"Paying debtor"

A debtor who consistently complies with the payment order is entitled to a reduction of up to 25% of the arrears interest accumulated in the file.

What to do when there are several Execution Office files?

More creditors -more worries. Dealing with several Execution Office files at once creates a complex and stressful situation for the debtor. The debtor is exposed to several creditors seeking to impose attachments and sanctions on them. To allow the debtor to cope with this situation, the system makes it possible to bring all the files under one roof. This procedure is called "consolidation of files".

What is the difference between a payment order and consolidation of files?

Both a payment order and consolidation of files are designed to allow the debtor to repay their debts in monthly installments; nevertheless, the difference between them is great. A payment order is based on an individual decision given in one specific file. This means that receiving a payment order in one file will not prevent sanctions from being imposed in the other files against the debtor. To receive a payment order in the additional files, they must submit separate applications and pay separate amounts to each creditor.

By contrast, consolidation of files is a procedure in which all the open debt files against the debtor (except for exceptions such as child support files) are combined into one large, central file. As part of the consolidation, a comprehensive payment order is set, provided the debtor meets the conditions of the law and can repay all the debts within the periods it sets (two to 3 years, depending on the size of the debt). The Enforcement and Collection Authority divides the monthly payment among the various creditors.

When is it worth considering consolidation of files?

It is worth requesting consolidation of files where the debtor has several creditors and several files are being conducted against them at once. When the various creditors start imposing attachments at the same time, consolidation of files can stop this and freeze their ability to act independently.

Payment order or insolvency

When a debtor faces multiple creditors and multiple debts, they can act in two main ways – obtaining a payment order within the Execution Office or entering insolvency and economic rehabilitation proceedings. The choice between the two depends on the ratio between the size of the debt and the debtor's financial ability to repay it.

When does a payment order not provide a sufficient solution?

A payment order is an excellent solution for many people. However, in certain situations it stops being effective. For example, when the arrears interest is higher than the monthly repayment amount, there is no point in a payment order, since the debt only keeps growing. A payment order stays proceedings only in the file in which it was given, and does not prevent creditors in parallel files from continuing to take attachments and restrictions.

When is it worth considering insolvency proceedings?

Insolvency proceedings, regulated under the Insolvency and Economic Rehabilitation Law, 5778-2018, can be a beneficial solution for debtors where total debts are significantly higher than their earning capacity and there is no realistic way to pay the full debt. These proceedings also suit those who want to obtain a "discharge" (debt write-off), since at the end of the repayment plan the remaining debt is erased completely.

Within insolvency proceedings, all sanctions and attachments are frozen completely and immediately. For debtors dealing with a large number of attachments, this solution can help them and protect them from creditors.

In which cases can a lawyer specializing in debt enforcement help with a payment order?

The Execution Office system is complex and bureaucratic. To deal with the system, many applications must be submitted and supported with the right arguments and appropriate evidence. The guidance of an Execution Office lawyer can provide maximum legal protection and make sure that the debtor's legal rights are fully preserved, all in order to set out on a new financial path. A person in a complex financial situation, dealing with debts, financial difficulties, attachments, creditors and various restrictions, needs a professional to guide them in forming the right strategy, striving for a payment order that benefits them, but beyond that – one they will be able to keep up with.

Applications for a payment order, and applications at the Execution Office in general, are often rejected because of inaccurate details, unsuitable documents and grounds that do not match the actual situation. An experienced lawyer will know how to gather all the data, present the debtor's financial situation to the Execution Office and make sure the way to obtaining a payment order is clear.

Frequently asked questions about Execution Office payment orders

Does a payment order stop attachments?

Complying with a payment order automatically prevents and stays the imposition of new attachments and proceedings. However, the order does not cancel existing attachments that have already been imposed; to cancel an existing attachment (such as releasing a bank account or cancelling a salary attachment), a separate, reasoned application to cancel the attachment must be submitted in parallel.

Can a payment order be obtained when attachments have already been imposed?

Definitely. Most debtors apply for a payment order after attachments have been imposed. The application for a payment order is one of the main ways to regulate collection and to ask the Execution Office registrar to remove the attachments.

Can the creditor object to a payment order?

Yes, the creditor can object to a payment order. The creditor has a legal right to receive a copy of the application and to submit their response or objection to the amount offered. In the event of an objection, the Execution Office registrar will examine both parties' claims and may even summon the debtor to an in-person means examination before deciding the application.

How long does it take to receive a decision on an application for a payment order?

Usually, an interim decision or a decision instructing the creditor to respond to the application is received within a few days to a few weeks of submitting the application. The final decision on the amount of the fixed order is expected within a few months.

Can the payment order amount be changed after it has been set?

Yes, the payment order amount can be changed after it has been set. A payment order is a dynamic decision that can be changed, provided a material change in circumstances since the original order was given has been proven.