Various aspects of poverty and financial management patterns in the haredi public
This study is a continuation of the series of studies in which Nitsa (Kaliner) Kasir participated (and which is partly based on those studies) regarding poverty in haredi society, and examines the connection between low socioeconomic status and indebtedness in general, and debts that have reached the Enforcement and Collection Authority, in particular. The data show that there is a high negative correlation between socioeconomic status and indebtedness and the rate of debtors whose debts have reached the Enforcement and Collection Authority – a connection that works in both directions because poverty (difficult economic situation) is the main cause of indebtedness, and debts make poverty even deeper and make it difficult to pull free of it. Debts also affect every aspect of life and the ability of the debtor to cope with day-to-day difficulties, including the debts. Even so, in the case of haredi society, this connection does not exist. In haredi society, in which about half of the people are poor and about 70 percent are low income earners, the rate of debtors is low. In haredi communities that belong to a particularly lowe socioeconomic cluster, the rate of those who owe money to the Enforcement and Collection Authority is very low and is similar to the rate in the general population, in communities in the higher clusters.
The relatively low rate of debtors who owe money to the Enforcement and Collection Authority is explained by the fact that while poverty in general society is a result of failures and barriers, the low income levels and the poverty in haredi society are the result of a conscious and considered choice (in keeping with their worldview) for a life that reflects poverty, but on the other hand also a high level of purpose in accordance with the unique welfare element in that society. This being the case, many haredim manage their finances responsibly, and adjust their expenses to their income. In addition, the community structure of haredi society is fertile ground for the establishment and development of organizations in many areas that help and even maintain the economic balance. These organizations include help for new mothers after childbirth, various education organizations to help children with their studies, economic organizations with various models (gmach interest-free loan, charity in the form of grants, and store vouchers, financial counseling etc.) that help families from the lower strata of the population to cope with economic difficulties.
This unique economic management is a significant factor that results in the low rate of debtors and people in haredi society who have cases being handled by the Enforcement and Collection Authority. In addition, it is noteworthy that even those who need loans within this society have high accessibility to inexpensive loans. These loans are provided from gmach (mutual aid society) funds, interest free and with manageable repayment plans, whose aim is to make life easier for the borrowers and enable them to live with dignity while gradually repaying their debts. It is important to note that even when a debtor has difficulty meeting the loan installments, in many cases the mutual aid fund system will allow the borrower to take out another loan to repay old loans (debt recycling). If a debtor cannot meet his loan payments, whether to individuals or to a gmach, the creditors go through channels within the community for assistance in collecting the debt, such as: guarantors and the debtor’s relatives, the community rabbis and institutions, social pressure from the within the community or rabbinical tribunal. The strong sense of deterrence from an appeal to the authorities also affects this facet of life, and is another factor behind the low rate of debtors whose debts have reached the Enforcement and Collection Authority.
This article was presented at the conference marking the tenth anniversary of the establishment of the Enforcement and Collection Authority (held jointly with Tel Aviv University’s Faculty of Law), and was published in the collection of articles that the authority published in honor of the conference.