Interest Rate Reduction

Table of Contents

Unpaid debts are a slippery slope because they can accumulate rather quickly. When a debt is not paid on time, a debtor must repay it with interest and the interest on late payment to the execution authority is much higher than the interest one would pay to the bank. Fortunately, it is possible to apply for a reduction in interest rate. 

How do I apply for interest rate reduction?

The execution registrar may reduce the interest either on his own initiative or at the debtor’s request. A debtor who wants to have their interest rates reduced must submit a request to the execution authority to be recognized as a ‘paying debtor’. This can be done in several ways:

  • Online: submit through the ‘personal area’ on the Enforcement and Collection Authority website
  • By post: send the form by post to the office that is handling your case
  • In-person: submit the form physically at the relevant office 

Is interest rate reduction available for any kind of debt?

No. A person who owes alimony payments – termed ‘maintenance debts’ or khov mezonot’ – cannot apply for interest rate reduction.  A request to be recognized as a ‘paying debtor’ is only valid for debts that are not alimony payments. 

I’ve submitted my request. What’s next?

One can expect to receive a decision within 45 days. If the request to be recognized as a ‘paying debtor’ is accepted, up to 25% of the interest accumulated on the balance of the debt will be reduced. Also,collection procedures that may have been initiated against a debtor will be canceled or delayed. These actions include foreclosures on property, salary and vehicles. 

If the request is denied, an appeal must be submitted no more than 30 days after receiving the decision. 

The execution registrar is the sole deciding authority. If they believe that an interest rate reduction will harm the collection of a debt, the debtor will have to pay at the normal interest rate. 

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