The evolution of the fresh-start policy in Israeli bankruptcy law

A fresh-start policy in bankruptcy provides the honest but financially troubled individual some form of financial relief in an attempt to provide him with an opportunity to productively reintegrate into the economy and society. While some countries today provide broad financial relief to individuals who resort to bankruptcy protection, many countries have retained a largely limited as well as punitive fresh-start policy. This article explores the evolution of the fresh-start policy in Israel. While it briefly examines the attitudes and practices adopted towards financially troubled individuals historically in the Jewish tradition, it focuses on tracing those attitudes and practices to the modern day State of Israel. It demonstrates that the attitudes and practices historically held by Jewish communities towards financially troubled individuals have progressively evolved from an obsession with protecting the dignity and freedom rights of the individual debtor to preoccupation with preserving morality in the credit market and neutralizing perceived opportunistic behavior on the part of debtors. However, most recently, bold legislative and judicial steps suggest that a new philosophy towards financially troubled individuals may be emerging in Israel. This philosophy may not only promote and safeguard fundamental tenets of human dignity and freedom, but it may also produce a fresh-start policy in Israel that is more consistent with the original thinking on this matter in the Jewish tradition.