(1) By Jewish belief, the soul is fundamentally part of God - it is fundamentally good and pure and not capable of "sin"
"sin" is the effect of the body's relation to the material world in negative ways.
it (for best metaphorical description) adheres to the soul like dirt.
and, like dirt, it is cleansed away - this can be through repentance in this world, through suffering in this world,
and, at worst, through a period of cleansing in the next world.
This cleansing place is often described as a cleansing fire -- and can be translated as hell.
However - it is not punishment and it is by no means permanent.
The best translation to Christian concepts is Purgatory.
(the sins are "purged")
(2) By Jewish belief, the soul has a job to do in this world.
If the job is not done, it must return to the world until the job is done.
Once the job is done - then the soul goes back to God.
Failure is therefore "punished" through returning to continue the job.