Debt Collection in Turkey

Introduction
Debt collection in Turkey refers to the specific legal processes aiming at pursuing a specific amount of money. This article will shed light on how debt collection in Turkey functions.

What is the Definition of Debt Collection in Turkey?
It has been largely accepted that those three terms are interrelated and interchangeable.

Firstly, debt collection in Turkey means filing a lawsuit to tolerate an overdue payment.

Secondly, the term insolvency means the condition of not having enough money to pay debts. It necessarily follows that the involved person cannot have a chance to meet debt payments on time.

Thirdly, bankruptcy refers to a legal process when the relevant natural or legal person declares his/her/its debts will not be able to be paid.

What is an example of a debt collection?
The first requirement of a debt collection procedure is the existence of an overdue payment. That payment can be properly proven by payment through digital or physical banking receipt.

What is the most important strategy for carrying out a debt collection in Turkey?
One needs to bear in mind that a robust and workable strategy should be developed at the beginning for a successful outcome for debt collection in Turkey.  The first thing needs to be considered is whether the debtor side or particularly debtor company is alive and active to meet any forcible seizure of debtor assets or not. Additionally, if the debtor company that had taken the payment is not alive; or the link between the company or the so-called company representatives is missing, the chance of success for any debt collection in Turkey will be quite lower. It is useful to be aware that even very well-known company information and trademarks may be misused by fraudulent people. For such types of cases, rather than performing a debt collection, starting with a criminal case may be much more logical.

For more information about criminal procedures take a look at our article on Criminal Cases in Turkey

How can debt collection in Turkey be performed?
After making sure of no need for criminal procedures, civil debt collection in Turkey should be carried out in two ways:

1. Without Court Judgment
Debt collection in Turkey can be performed without court judgment (ilamsız icra takibi in Turkish). The relevant enforcement debt collection office (icra kalemi in Turkish) will start the procedures after the application and following the review of necessary paperwork, set forth in the file. Upon a challenge by the debtor party, the case will be tried by commercial court.

2. With Court Judgment
Debt collection inTurkey can be carried out based on a civil court judgment ordering a specific amount of money transfer from the debtor to the creditor.

Asset Seizure for Debt Collection in Turkey
In general, any movable or immovable property, rights, or receivables owned by the debtor may be subject to seizure through both procedures. Pursuant to Article 85/1 of the Turkish Enforcement and Bankruptcy Law (EBL), assets sufficient to cover the debt—whether in the debtor’s possession or held by third parties—may be seized. Nonetheless, a wide margin of appreciation is granted to the judicial authorities to accept

What are the initial procedural requirements for a civil case aiming at debt collection in Turkey?
Compulsory Mediation: It is significant to know that a commercial dispute somehow should start with a compulsory mediation process before an assigned mediator first. In the absence of a fair agreement, the case will be tried by relevant commercial courts.

What is the seizure of company assets within the context of debt collection in Turkey?
Seizure of Company Assets: If the debtor company fails to pay the debt within the prescribed time or its objections are dismissed, the creditor may request a seizure from the enforcement office.

Security Deposit for Foreigners: In the absence of a mutual agreement or international agreement based on principle of reciprocity,  security deposit payment is obligatory for foreign legal or natural entities

Interim Measure Requests:  In the event that it is demonstrated that a delay may cause irreparable or hardly reparable damages, creditors may ask from the court to take interim measures including asset freezing of debtor side.

Conclusion
In the light of the above-mentioned considerations, it becomes clear that debt collection in Turkey is not a very easy process. Understanding and absorbing key details is very critical for the best chance of achievement