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The Debt Cycle: How It Happens
The story is familiar: a small overdraft during a difficult month becomes a permanent negative balance. Then a consumer loan to cover the overdraft. Then another loan to cover the first loan payment. Credit cards reach their limits.
Suddenly you are paying $2,200-$3,300 monthly on debt service alone - and the debt is not decreasing, only growing due to interest and fees.
Bank Overdraft
Interest: 12-18% annually
Consumer Loans
Interest: 8-15% over 3-5 years
Credit Cards
Interest: Up to 24% annually!
The Solution: Strategic Debt Restructuring
Debt Restructuring (or Liability Consolidation) - this is not simply "another loan." It is a fundamental restructuring of your debt portfolio so you pay significantly less monthly and free capital for living.
How Does It Work?
Step 1: Complete Liability Inventory
Document all obligations: overdraft, loans, credit cards - total debt and monthly payments
Step 2: Secure Home Equity Loan
Use your property as collateral, obtain one large loan at low interest (3-4%)
Step 3: Retire All High-Cost Obligations
Close the overdraft, all loans, and credit card balances with one payment
Step 4: Achieve Financial Freedom
Instead of 10 payments - one payment, reduced by 40-60%
The 70% LTV Regulation: Your New Financial Tool for 2025
In December 2024, the Bank of Israel made permanent a regulation that was previously temporary: you can now finance up to 70% of property value for any purpose.
The implication: If you own property with equity, you have access to low-cost financing for debt consolidation.
Numerical Example:
Case Study: The Levi Family, Netanya
Before Restructuring
After Restructuring
Mathematics, Not Magic
The Levi family freed $1,860 net monthly. Annually that is $22,320 - money that previously went to interest and fees, now remains with the family for living, savings, and investments.
The Benefits of Debt Restructuring
Reduce Payments by 40-60%
Instead of $2,200-$3,300 monthly, pay $850-$1,400. The difference remains in your pocket for living.
Stop Compound Interest
Loans at 10-15% interest are replaced with mortgage at 3-4%. This stops the financial bleeding.
One Payment Instead of Ten
Easier to manage, easier to plan, no risk of missing a payment and incurring penalties.
Credit Score Recovery
Closing all problematic loans improves your credit score within 6-12 months. Regain control of your financial future.
Israel Residents Only
The 70% LTV regulation and Israeli mortgage options described apply to Israeli citizens and permanent residents with properties in Israel. Have family in Israel who might benefit? Share this guide with them.
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Legal Disclaimer
The information and simulations presented on this website are for illustrative purposes only and do not constitute a binding offer for credit or financial advice. Credit Approval: Subject to final underwriting, clean credit data (positive credit score), clean banking history, and meeting the threshold requirements of the financing institutions. Interest Rates: The interest rates displayed are estimates only, based on average market data, and may change at any time according to the client's individual risk profile and economic conditions (Bank of Israel interest rate changes / CPI). No Commitment: RealFix does not guarantee loan approval or the terms displayed in the calculator. E&OE.
