"Mediating Between Debtors and Tough Criminals in Israel": Chaim Har Kesef Reveals the Operational Methods

Anyone who visited Rabbi Akiva Street in Bnei Brak recently witnessed a heart-wrenching sight: dozens of stores on the city's main avenue hung signs announcing the store's closure or clearance sales, and in other cases, notices redirected those still in need of service to a different address after the shop owners previously announced the closing.

The Responsibility Association, which engages in debt relief and economic rehabilitation of citizens who have fallen into debt, disseminated these images, indicating the depth of the collapse some businesses in the city have faced. Chaim Har Kesef, the association's secretary, told Hidabroot in a conversation, "In the documentation published by the organization, you can see many stores have been locked and closed due to the lockdown imposed on the State of Israel during Nissan-Iyar. These are businesses into which people invested their entire lives, saved from their own mouths to establish them, only to find themselves having to close due to the COVID-19 pandemic and the ensuing lockdown.

"According to our investigation," he adds, "about a third of businesses and shops on Rabbi Akiva Street in Bnei Brak collapsed recently." He says these are particularly dramatic figures, given the precise statistics might be even higher. "We estimate that the number of businesses that will close due to the crisis is almost double those that have closed so far. The remaining business owners are still trying to bide their time in hopes that it will allow them to continue to keep their shops, but some will likely have to close their shops eventually.

A Father Started a Business, And the Son Had to Close It

Why do businesses that have existed for many years collapse after only a few months without income?

"We need to understand how the business environment operates today," Chaim explains. "A person who opens a business typically takes out large loans at the start. After that, for many years, they pay off their debts with the profits they accrue. Also, for the vast majority of businesses, payments to suppliers are made based on future profits. So a business owner who purchased goods in February issued checks supposed to be cashed in April, meaning by April he must have income to fund the payment for suppliers from previous months. This means, in the absence of income in future months, they might economically collapse. This is the way most businesses in Israel operate, in my estimation, and therefore the period when businesses were not allowed to operate led to chaos among many businesses in Israel."

Store closing on Rabbi Akiva

Can you specify specific cases that have reached your table, of business owners who had to close their shops?

"Indeed, one of the stories we follow is of Shmuel, who inherited a clothing store from his father. The store functioned for many years, providing a good livelihood for Shmuel's family. For Shmuel, maintaining the business was not only an economic aspect but also an emotional one. 'This is my father's store,' he explained to us," Har Kesef specifies. "But the COVID-19 crisis forced Shmuel to close the store after being left with unpaid supplier debts due to customers stopping coming during COVID-19. And this is not the only story arriving at our table recently. We are currently dealing with at least ten cases. I hope that the other collapsing businesses are also getting some kind of support."

Nevertheless, Chaim has some good news. "According to our examination," he says, "the number of debt enforcement files in Bnei Brak since the outbreak of the COVID-19 crisis has not increased. And here, I want to say a good word about the ultra-Orthodox public, who know how to limit their expenses and be careful not to enter into debt. By the way, the things I'm saying are mainly true for the city of Bnei Brak, but I suspect the situation is similar in other cities as well."

How do you help businesses that approach you?

"In some cases, we approached creditors pushing the small businesses, telling them that if they want the stores to continue buying from them in the future and not collapse, they must rally to assist them in these tough times by extending payment plans to a longer term, so the business owners can escape the crisis and continue buying from them. In most cases, creditors agreed because it's in their interest," Chaim notes that similar activity is conducted with banks familiar with the association's people. "After banks see an organized work plan for debt repayment, they usually grant the business owner the breathing room they need," he says.

The Responsibility Association also provides business owners with additional advice concerning, for instance, the lifestyle conducted by the owner experiencing difficulty, and they advise changing their lifestyle. "Sometimes, people accustomed to high economic income naturally conduct themselves differently than those without high financial income, so our role in some cases is to explain to those who come to us that they need to limit their expenses and make do with less during this period. Additionally, we collaborate with professional economic experts who help the business owner navigate this period well."

Chaim Har Kesef further adds that there are several iron principles for those in economic difficulties: "Share your situation with your employees; it will only help them and you to go through the period better. Share also with your suppliers and explain that if they want to continue seeing you as their customers, they will have to give you economic leeway, without which you might fall. Only in this way will you survive the crisis," he clarifies.

"Don’t Borrow Loans from Just Anyone"

The Responsibility organization was established with the encouragement and guidance of Rabbi Shmuel Eliezer Stern, and since its inception, it has helped many people escape a tough economic situation. "I joined the organization due to my personal experience," Chaim shares. "Five years ago, I owned multiple businesses in Bnei Brak, and one day everything collapsed before my eyes. The day it happened, I had to deal with ten different lawyers and creditors, each pulling the rope in a different direction, accountants, various authorities, minorities. Suddenly, I discovered that a person in such a situation might lose even more money because he is not going to work and is constantly rolling over funds."

Another closed store

What were the reasons that led to your economic downfall?

"Several things accumulated for me over time, but the final blow came when a business partner asked me to hand over checks for two million shekels to him, promising me in return a share of the profits and various funds. But the promises remained unfulfilled, while that person had to flee the country, while I remained in Israel with the uncovered checks.

"One day, I received a phone call from a man in Tel Aviv, inviting me to a meeting in his office. The man told me he had several returned checks of mine, and he needed me to come to him to discuss what could be done. Trying to maintain my image and reputation with suppliers and banks, I hurried to reach him to see what could be done. Upon arriving at the office, I discovered a frightening-looking man, and later, when I checked who he was, I found that he was indeed as such. Then we sat down together, and he said to me: 'Listen, checks of yours worth 300,000 shekels have bounced. Look, I don't care, I'm not angry with you, and I'm ready to spread it even over twenty payments. Sign here, take the checks, and give me new checks; we'll spread them into payments, and we'll close the story.' I left there after that individual agreed to spread it over 36 payments, and I felt good about myself, thinking I managed to influence him to give me extended terms. Back then, I didn't realize what a tough predicament I had entered.

"It was a major mistake," Chaim says in retrospect. "I shouldn't have signed anything for him, but rather to tell him that I don't know him, and I don't know how he got my checks. Thus, I'm not intending to discuss the matter with him. Only then could I have stated in court that I didn't know him, and the checks reached him through a third party. These mistakes from that period are what I now strive to prevent others from making. Indeed, over the years, I have led people who fell into the same problem out, where, in almost all cases, the courts absolve the 'debtors' from having to pay these criminals."

How does the life of a person in such a situation look?

"First of all, there's the feeling, which is particularly harsh. In my case, it was even worse than another individual economically crashing. Just two weeks prior, I behaved like an affluent person owning three stores; I also had a luxury car, and suddenly I found myself in a situation without even money for cheap products. Turning from a respected and well-known businessman to an ordinary bankrupt is particularly challenging.

"At that time, I had 50 creditors and ten criminals to contend with, all by myself," he adds. "Naturally, people you owe money to want to hear from you weekly, wanting updates. Each tries to pressure you differently: one calls your parents, another thinks pressuring your wife might help them recover their lost amounts. Each finds a way to ensure the money they've lent you is returned. So you're entirely consumed with this day and night, without the ability to work or generate cash. You're always in touch with creditors, leaving no leisure for anything else."

Here, Chaim wants to caution debtors: "Don't borrow money from just anyone. A loan with a 3% monthly interest rate is forbidden by the Torah, and even if it seems like dealing with a straight person—this is a severe prohibition. Also, pragmatically speaking: you can't truly sustain a repayment on a loan with such an interest rate."

He also adds: "Such cases of individuals lending with interest provoke extreme displeasure in Rabbi Matityahu Halberstadt, the chairman of the association, who is a true activist of the old school, a man of kindness supporting the association and aiding the activists. Because the issue of interest is the most important one for Rabbi Matityahu, we do everything to raise public awareness about it. Rabbi Matityahu himself stands and warns about it from every possible stage."

Mediation with Israel's Major Criminals

The people of the Responsibility association work around the clock to rescue people from dire economic situations. According to Chaim Har Kesef, "Most of those falling into debt flee abroad because they can't bear the situation. "But," he says, "fleeing the country often results in disaster. In most cases, the family is completely destroyed, the family breaks apart, children start wandering the streets. We know particularly difficult stories of families forced to flee abroad."

According to him, "There is an alternative, that being: seek help in the country. You can reach out to Responsibility association or other professional entities who can save your economic situation. Blessed is Hashem, only two cases out of hundreds of files under our care ended with the debtor fleeing abroad, and one of those was with our approval," he notes. "But all the others not only didn't flee abroad, but some didn't even move houses. We teach debtors how to manage debts and creditors. Manage the debts in the optimal way. For this, we accompany them all along the way to enable them to continue working in an earning job while also allocating a large portion of their salary to debt repayment."

Other points Chaim Har Kesef highlights are faith in Hashem and prayer, which fortify those who have fallen, enabling them to stand stronger against creditors. He also notes that he hasn't seen anyone who followed their Rabbi's instructions and failed.

In some of these cases, you are surely forced to deal with the underworld, how do you do it?

"We are not afraid of them. These criminals also seek to get their money back. They don't intend to find the debtor abroad. Therefore, we sit with them and explain that they will gain nothing if they keep pressuring the debtor, and hence we offer them a settlement on lightened terms that allows the debtor to actually repay the debts and continue living their lives in the country.

"This activity proves itself. We once met with a certain well-known person who told us: 'If there's one shekel on the side – I want it for myself. But, if the person has no money, I give up the whole matter.' That individual believed there were large sums the debtor was hiding from him, thus fought him. But we clarified the situation was entirely different, and reached agreements with him."

Nonetheless, Chaim Har Kesef explains that "an ordinary person does not have the capacity to deal with these criminals. We operate against them with a team who knows the field and can provide appropriate responses in different cases."

In conclusion, he says there are surprisingly special cases where they have helped debtors out. "There was a person, in the underworld, who had a connection to a certain Rabbi. When we discovered this, we managed to influence him through his Rabbi, and he agreed to cancel the debt. In another case, a lender in the underworld forgave a significant part of the debt after we promised that our Rabbi would make a 'mi sheberach' for him on the holiest day of the year – Yom Kippur. Indeed, the Rabbi made a mi sheberach for him, and he forgave a substantial part of the debt."