Does the statute of limitations automatically cancel an Israeli debt?

No. Limitation under Israeli law is a procedural defense, not an automatic extinction of the debt. The debtor must actively raise limitation in court proceedings — if they do not, the court can still rule in the creditor's favor even on a technically time-barred claim. Acknowledging the debt in writing or making any partial payment resets the entire 7-year clock under Section 9 of the Limitation Law.