The impact of obligations on our lives is not only reflected in the practical aspect of daily conduct. The effect also penetrates deep into the soul and can be destructive: weighing on the soul and sitting on the heart at every moment.
If we felt this way because of any other problem, such as a medical problem that bothers us, we would surely begin to find out the source of the problem in order to try to solve it and adopt a lifestyle that will not cause a recurrence of the problem.
The same should be done regarding debt handling.
Where do you start? First
What is debt? Debt in its simple definition is a sum of money that must be paid to another.
To understand the scope of our debts, we needto separate “open debts” from “hidden debts.”
Visible debtsare defined amounts of money that we owe:
- Bank.
- Friends.
- to the Israel Broadcasting Authority.
- To the cellular company.
- To the municipality and similar bodies
Hidden debts are sumsof money that we have already committed to and have not yet paid by us for a variety of reasons. For example:
- Payments that should come off your account at the end of the month, like your credit card charge.
- Unpaid deferred check.
- A minus in a bank that bears interest.
- Installment purchases (outstanding payments are debt).
- Unpaid parking ticket (obviously, it’s not you fault! It’s the annoying inspector. But guess who has to pay the ticket in the end?)
- The bill at the neighborhood grocery store.
These payments that are perceived as negligible may accumulate and accrue interest, and in the end this procrastination may cost us a lot of money.
Other significant debts are debts in execution, bankruptcy, and gray market debt.
These obligations, which are backed by particularly strong bodies, make us sleep in a special way, and of course they must be treated accordingly. Precisely because of their complexity, they should be dealt with directly and closely through personal advice from professionals and we will not deal with them in the framework of this article. However, we should mention and emphasize that taking grey market loans should be avoided at all costs, these loans are off limits, period.
“What doesn’t go in the brain goes by force”
Debts must be paid in any case. In this article we will explain how to avoid deterioration and the transformation of debts into ones that require legal intervention such as execution and bankruptcy. This is based on the clear knowledge that handling a debt before it becomes a legal debt is usually simpler and especially cheaper.
Sowhatdidwe have?
The obligations that can accompany us (unfortunately) in our daily lives are:
- Loans from the bank
- Overdraft (minus or overdraft)
- Credit Cards
- Payroll loans
- Loans from work
- Loans from a study fund
- grocery store
- Gemachim
- dentist
- Family & Friends
- Mortgage payment arrears
- Individuals
- Unpaid checks
- Rent
- Income tax, VAT, National Insurance
- Arnona
- electricity
- phone
- Mobile
- Tuition fees
Knowyourduties
In order to deal with this long list and not give up in advance, we will prepare an organizedtablethatwill helpusmapthedebts.
Here’s an example:
| Name of creditor | Amount of debt (or settlement balance) | Date of creation of debt | Percentage of interest paid on debt | Number of payments remainingand payable | Monthly refund amount | commentary |
| “Michelines” | 14,900 | 6/2013 | 2.05% | 16 | 900 | From Yossi’s work |
| Bank Leumi | 13,000 | 4/12/2013 | 8.65% | Credit facility: 20,000 to 5,000, 5.55% interest, 5,000-20,000, 8.65% interest. |
Attention!
Duties are divided into two main types and another type:
Regulated debts: Debts for which a settlement has been reached with the creditor or lender and for which a monthly, fixed or one-time repayment is usually required. For example: bank loans or credit card payments.
Unregulated debts: Debts for which no payment date has been set in coordination with the creditor or lender. For example: grocery debt, arrears of municipal taxes, bounced check or overdraft at the bank.
It is worthwhile to fill in the table all regulated debts followed by the unregulated debts.
Mortgage: The mortgage is indeed a debt, but for the purpose of mapping the debts in the debt table, we will not consider it as a debt, but as an ongoing housing expense. Just like spending for rent. These expenses we record in a separate table. Only if there is arrears in mortgage payments, will we treat the arrears as a debt.
How did these obligations come about in the first place?
Without an understanding of how debts are created, there is no point in starting to deal with them, since they will soon come back through the back door.
One type of debt is debt created due to anticipated or unforeseen life circumstances for which you were not prepared in advance: dismissal, illness and, as opposed to the daughter’s wedding or the son’s bar mitzvah. Another type of debt is debt created due to poor ongoing conduct in which you spent more than you earned.
Duties of the second type are not settled before changing lifestyle. Changing our lifestyle in the present to ensure that our incomes exceed our expenses will stop future debts from piling up – allowing past debts to be settled.
What, then, is the first step to solving the debt problem? Prioritizing obligations and handling them accordingly. How do you do it? About this in the next chapter –
prioritizing duties
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Note: The guide does not deal with debts in execution, bankruptcy, and grey market debt. These obligations are obligations in every respect and of course they must be addressed. However, due to their great complexity and their broad implications, they should be dealt with in a special way through personal guidance and advice from professionals in the field, and we will not deal with them within the framework of the current guide. The purpose of this guide is to help as much as possible from deteriorating debts into legal obligations such as bankruptcy, knowing full well that handling a debt before it becomes a legal debt is usually simpler and mostly cheaper.
