Israeli debtors are hounded all the way to prison

July 09, 1993|By Doug Struck | Doug Struck,Jerusalem Bureau Staff writer Danna Bethlehem contributed to this article.

TEL AVIV -- Rachel and Moshe Solomovich sleep in public parks. This polite, middle-aged couple is on the run from the police, who want to send them to debtors' prison for their son's unpaid loan.

Danny Zemmer has been behind bars five times for owing money. He had a taxi business, but when he had a heart attack in 1984, his partners ran up a debt. Now Mr. Zemmer, too, sleeps in cars or public benches to avoid re-arrest.

"The worst thing is they broke up my family," said Mr. Zemmer, 50. "My wife stays with her sister, and my children stay with friends. I've thought of hanging myself several times."

Some have. Israel's debt laws -- it is said to be the only democratic country that still imprisons people for failure to pay commercial and personal debts -- have caused deaths. At least two lurid family murder-suicides this year have been laid to despair over indebtedness.

"The system here is wrong. Lives of debtors have become hell," said Yisrael Itzkovitz, who formed a group to lobby for changes in the law after he was briefly imprisoned for an unpaid business loan.

Israel's lending and collection laws appear to be stacked against consumers. Easy credit lures the unwary, high interest and multiple fees quickly swell bank loans, and the uncontrolled "grey market" of private loans is shockingly usurious. All these debts can ultimately be collected with the help of an arrest

warrant and jail for those who don't or can't pay.

With a minimum of fuss, a creditor gets the government collection agency to send a notice to a creditor. If the creditor doesn't pay up, a police officer is sent out. The debtor can be jailed for successive three-week periods that can add up to months. Those with no money have no escape: Bankruptcy is reserved for people who can repay at least one-third of their debts.

"Nowhere in the world does imprisonment for poverty exist like this," said Mr. Itzkovitz, who still moves his family every year to make it more difficult for police to find him.

Faced with growing calls for reform and spurred by teary news accounts of average Israelis led away in handcuffs, the government has proposed legislation to reduce -- but not eliminate -- imprisonment penalties for unpaid debt.

"The present situation cannot continue," David Libai, the Justice Minister, said recently. "But we cannot go from one extreme to another." Eliminating the threat of jail "would create chaos, and it would create a feeling among debtors that they don't have to pay their debts."

In a country of 5 million people, the government-run collection agency issues 500,000 arrest warrants a year. Some are duplicative warrants for the same person, and most who receive a warrant settle their debt when the police officer first shows up to arrest them.

But Justice Ministry records show that in 1992, 24,000 people were put in jail for nonpayment of loans, fines or other legal debts. Mr. Itzkovitz's group says the figures are higher -- at least 40,000 a year.

That does not count those whose lives are disrupted as they scramble to avoid going to jail.

Rachel Numa is one such case. She and her husband, a city sanitation worker, lived with their four children in 1988 when he co-signed a brother's loan for a house. Five or more co-signers, or "guarantors," are required on almost all loans in Israel. It is customary for family and friends to guarantee each others' loans.

When the brother failed to make payments, the bank seized the Numas' furniture and put her husband in jail for almost one month. The balance of the loan still remained. The law allows multiple arrests on a single loan, so Mr. Numa now hides from police to avoid being taken to jail again.

"For two years, my husband has slept in public parks and in cars to escape being arrested. If he's arrested again, he will lose his job," said Mrs. Numa, 46.

"Any time, night or day, the police will surround my house. The kids will shake with fear," she said. "My husband's a good man. But now I'm in divorce proceedings. I want to sleep in a house where it's normal, where it's quiet."

Good intentions, bad result

Hers is not a particularly uncommon story. Rachel Solomovich, 54, and her husband, Moshe, 58, signed a son's loan as guarantors and now find themselves on the street. The couple immigrated from Romania, and Mrs. Solomovich owned a beauty salon here. In 1989, they helped their son get a loan to open a shoe store, which failed.

Authorities seized her salon, cutting off the couple's income. They tried to evict them from their home and stopped only when Mr. Solomovich threatened to commit suicide in front of news reporters. But now the Solomoviches are afraid to go near their house because of arrest warrants against them.

"If they find us, they will take us. We sleep in the streets now," said Mrs. Solomovich.

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