Order of Discharge – Ending the Bankruptcy Procedure
What is an Order of Discharge? According to Israeli law, at the conclusion of the debtor’s process, after the debtor paid his debts according to the payment plan prescribed him, the Court grants him the Order of Discharge. This order grants the debtor the opportunity to start a new chapter in his life, as he is “free of debt” (other than the debts that were not exempted).
Our law firm in Jerusalem, specializes in legal issues regarding insolvency, writs of execution, and bankruptcy law. In this article, Attorney Nechama Ovadia, a bankruptcy lawyer, explains the various issues relating to discharge orders.
Granting a Discharge Order by Israeli Law
After receiving a Receivership Order and an examination of the financial status of the debtor as a part of the investigation, and as long as the debtor proceeds in accordance with requirements and in accordance with what the court decreed in regards to their payment plan (which usually takes between 3-5 years), the debtor receives the desired Discharge Order. Two types of discharge orders exist, as explained below:
1.“Conditional Order of Discharge”
The court has the option of granting a “conditional discharge” to the debtor. This exemption is conditional upon the debtor fulfilling the required conditions so that the exemption can take effect. The court prescribes conditions as part of the order, amongst which is a payment plan that the debtor must comply with. The payment plan generally includes monthly payments that do not exceed a period of 3 to 5 years (in exceptional cases the court can prescribe a shorter or longer period). If the debtor does not meet the conditions stipulated in the exemption, the court can revoke it.
2. “Immediate Order of Discharge”
The court has the option of granting an “immediate discharge” to the debtor, which is exactly what its name implies. This exemption is given immediately after the debtor is declared bankrupt, usually during the initial review of the declaration. In most cases, the exemption is given when it is found that the debtor has no present or future earning capacity, and owns no assets that could be used as collateral. Another condition is that it must be found that the creditors will not benefit from the procedure.
When this is the case, the court has no other option but to immediately grant the exemption to the debtor, since this is the main purpose of the bankruptcy process. The Immediate Order of Discharge is usually given to debtors who can demonstrate their economic health situation is unlikely to improve.
The Differences Between the Two Types of Orders
Of course, every debtor wishes to receive an Immediate Discharge Order. However, this order is only given in exceptional and extreme cases, after the court has come to the conclusion that continuing the process will provide no benefit to the creditors. The purpose of the bankruptcy proceedings is not punitive; rather, it is the repayment of debts and rehabilitation on the part of the debtor. Therefore, putting the debtor through this process without a concrete end goal in mind serves no purpose. When a debtor receives an Immediate Order of Discharge, their debts are immediately wiped clean and they can turn over a new page. The exemptive order gives the debtor a new opportunity and the ability to anticipate when and under which conditions their bankruptcy process will come to an end.
Why Consult with a Bankruptcy Lawyer in Jerusalem?
If you find yourself in the midst of a bankruptcy process and you think that an immediate exemption is appropriate for your situation, or if you would like to set up an appropriate payment plan, do not hesitate to contact one of our expert lawyers in the field who can submit the appropriate requests to the court.
Contact our office to get legal assistance and counsel on bankruptcy.
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