I see it every day. People who, up until two years ago, were living normal lives with successful businesses or reasonable salaries come into my office and simply do not understand how they reached this situation. How their account is overdrawn, how the bank suddenly refuses to help, and how an enforcement file (in Hebrew, hotza’a la’poal) was opened against them.
The war has taken a lot from us, but one of the things less talked about is the personal economic price. This is not about the numbers at the Finance Ministry or macroeconomics. This is about people serving in reserve duty for months on end and losing their business, about people who were laid off because their company couldn’t withstand the pressure, and about families whose savings evaporated within months.
The data speaks for itself: Today, there are about two million open files in the Law Enforcement and Collection System Authority. Let that sink in: two million. About 378,000 of them were opened in 2024 alone. This is a 25% increase in the last two years. This is not just a statistical number; it’s a quarter of a million life stories that have been overturned, families who have entered a vortex that will accompany them for years to come.
I meet with people like this every day. And there is one recurring thing I see: The vast majority wait too long before they start taking action. They hope the situation will improve on its own, that the account will somehow be closed, and that the bank will understand. But banks – and I have a love-hate relationship with this industry – are like the well-known joke: They hand out umbrellas in the summer and ask for them back precisely during the winter storm.
What do you do?
First, you need to understand that there is a huge difference between someone who contacts the bank before the problem explodes and someone who comes after the account is already overdrawn. Banks are much more cooperative when you haven’t yet crossed the imaginary line of the credit limit and unpaid loan installments.
- If you feel the situation tightening and know that the next month will be difficult, now is the time to go to your bank branch and explore alternatives that won’t be available to you after a loan default or exceeding the limit.
- You can and should check options for debt spread (debt restructuring) or deferring loan or mortgage payments. Do not wait until the payment fails to clear the account. The moment that happens, you enter a completely different category.
Second, examine loan consolidation and mortgage refinancing. I know this sounds technical and scary, but we live in a time when an interest rate difference of 1% can make a difference of thousands of shekels per month. If you have several loans with different interest rates, the correct consolidation can significantly lower the monthly repayment. This is not magic; it is simply correct mathematics.
Third, and this is something many people do not know: If you have a real estate asset, even one with a mortgage on it, you can get an additional line of credit against it. Yes, this means mortgaging an already mortgaged asset, but sometimes this is exactly the money you need to align, close holes, and start a path of genuine recovery. The key is not to take this money and continue the same behavior but to use it to recalculate your trajectory.
Crisis as an opportunity
As the economy is expected to recover after the fighting subsides, it is especially important to remind those with debts that a crisis is also an opportunity. This is not a cheap inspirational slogan; it is something I see in practice. People who enter a crisis and use it to change their financial behavior, those who truly take a serious self-inventory and build a long-term plan – they are the ones who emerge stronger.
In contrast, those who only try to “survive” the next month, and then the next, and then the one after that – they are the ones who usually enter a cycle that can last for years without a real solution.
This war has left us with economic scars that will take time to heal. Still, do not bury your head in the sand. Do not wait for a letter from the Law Enforcement Authority or a situation where you cannot withdraw money from the ATM. The warning signs are there; pay attention to them and act. Because the way out of the economic pit begins not when you hit rock bottom but the moment you realize you are starting to descend and actively deal with the problem.
The writer is the CEO of Karin Finance, specializing in financial planning and credit for private and business clients.