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Debt Collection in Turkey

Administrative & Judicial Processes

Under the law relating to Turkish Debt Collection, a creditor is granted the right to collect its receivable in two ways:

Debt Enforcement via Administrative Procedure

Once the relevant administrative body has received the details of the claim it submits an order for payment to the debtor. If the debtor objects to the order for payment by claiming that the debt does not exist within 7 days (7 days if an ordinary debt. If the debt stems from a bill of exchange then the time frame for objection is reduced to 5 days) subsequent to submission of the letter, the enforcement process shall be frozen and the only way to proceed with it shall be to file a litigation case against the debtor company. In the event that the debtor does not make an objection to the payment order the proceedings shall finalize.

Debt Enforcement via Litigation Process

The litigation process shall be governed by the court with consideration given to evidence such as invoices, contracts, correspondence between the parties, accounting books and related proof. This process will also encompass hearings including claim and counterclaim procedures. The court fee related to litigation shall be also dependent on the amount of the debt.

The litigation process must be initiated by a Turkish attorney. Moreover, the attorney must be given a power of attorney (the “POA”). If the Claimant’s country is a party to the Hague Convention, the PoA must be stamped with the Hague Apostille via the usual government authorities, if not, the POA must be approved by a Turkish embassy or Consulate.

Debt collection in Turkey: advantages of the Litigation Approach

Filing an action of debt grants the claimant interim measures which make the litigation process more advantageous than the enforcement process. Firstly, the Claimant shall be entitled to request precautionary attachment to be placed on the fixed and liquid assets of the debtor along with the rights and receivables held by third parties.

The second remedy is to request for a preliminary injunction to freeze the fixed and liquid  assets of the debtor to restrict their sale and/or transfer to third parties under any manner whatsoever to prevent the debtor from stripping their assets until the completion of the proceedings. In all cases the court must be persuaded by illustrating the necessity of the subject interim measure.

If the Court awards in favor of the Claimant, the verdict can be enforced directly against the debtor. In the event of non-performance of the paying the debt, the Claimant shall be entitled to initiate an executive enforcement procedure with judgement before the execution office.

Debt collection in Turkey: executive procedure with judgement process

The executive procedure with judgement process is as follows:

The Claimant informs the debtor regarding their claim by sending an enforcement order (it is called a payment order in enforcement proceedings without judgement process) which is based on the favorable court decision.

If there are restrictions in the creditor’s country against Turkish Citizens and Turkish legal entities filing a litigation case in that country, the Turkish Court will request a security deposit from the creditor. Should there be no judicial assistance agreement or relevant convention between Turkey and third countries, there is an obligation to pay a security deposit (Cautio Judicatum Solvi) for foreign legal entities or real persons who intend to initiate a lawsuit or enforcement procedure in Turkey. (Article 97 of the Turkish Code of Civil Procedure and Article 32 of the Code of Private International Law and International Civil Procedure).

There is no amount or percentage specified with regard to the amount of the deposit, however in practice the courts determine 15% of the disputed amount to be an appropriate amount for the security deposit.

Countries with a Judicial Assistance Agreement with Turkey

A Judicial Assistance Agreement Exists between Turkey and the countries below:

United Kingdom, Germany, N. Cyprus ,Albania, Kuwait, Austria ,Lithuania, Azerbaijan, Hungary Bulgaria, Macedonia, Czech Republic, Algeria ,Moldova, China, Mongolia, Morocco, Uzbekistan, Georgia, Poland, India, Romania, Croatia, Tajikistan, Iraq, Tunisia, Jordan, Yugoslavia, Ukraine, Switzerland, Italy, Kazakhstan

There are also countries exempt from security deposit due to reciprocity principle in Turkish Private State Law Act. These countries do not apply any security deposit to Turkish citizens and legal entities in the case of debt recovery proceedings, accordingly Turkey does not seek any security deposit obligation for those countries: Russia, Egypt, Chile, Finland, Peru, Libya, Syria.

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Debt Collection

Available in the following locations: Ankara, Antalya, Aydın, Bodrum, Istanbul, Izmir, Kocaeli , Kusadasi, Manisa , Mersin, Mugla.

* If your local town is not listed, a lawyer from our nearest office will be happy to assist you.

Location

1Who is this Service for?

Anyone with experience running a business will have unfortunately been forced at some point to chase debtors for failing to pay for goods or services supplied.

Or perhaps a loan has been made and never repaid. Hopefully, a formal legal demand will be sufficient to ensure prompt repayment.

If not, other measures can be taken to enforce your rights, around the world.

2What does this service consist of?

  • Expedite and facilitate the collection of unpaid debts
  • Improve collection rates and where possible preserve existing business relationships
  • Collection is achieved either through extrajudicial or judicial procedures
  • Ensure a value-for-money service
  • All cases are undertaken with the strictest confidence and the clients are regularly kept up-to-date

3Fees

The Intelligent Debt Recovery Service provided by the English-speaking lawyers on the Advocate Abroad network allows you to take control and to begin the process of recovering outstanding debts in Spain – regardless of where you are located in the world.

Furthermore, you can do so without having to make any advanced payment for the services of any kind when choosing the no-win-no-fee option*.

* Please note, this does not include costs involved with Court Proceedings.

 

4Procedure

Negotiation With Debtors

Should the need arise, the lawyers on the Advocate Abroad network are experts in carrying out negotiations with debtors and will negotiate on your behalf for the return of the debt and will manage a debt plan with the debtor where you have provided us with full prior authorisation.

Obtaining all of the monies that you are owed is of course the primary objective here though you may decide that obtaining a percentage or the full amount over a period of time are acceptable alternatives.

Financial Report Before Going to Court

  • Going to court is a last resort but one that can be necessary in order to obtain a successful outcome. We should only really consider going ahead when all of the information relating to the debtor tells us that this will be a worthwhile strategy.
  • It is possible to obtain valuable information about the financial position of Spanish individuals and companies from a number of important sources. This would include:
  • The commercial register which contains a host of information about companies such as fixed assets and annual returns;
  • The property register which holds information on any assets registered in the names of individuals including sole traders;

The RAI register which contains valuable reports of any previous failure by the company to pay creditors Advocate Abroad can arrange for a report to be drawn-up and a recommendation to be provided – by specialist lawyers – on whether to pursue the debtor in the Courts.

It is strongly recommended to obtain a financial report before proceeding to take court action.

Court Process

If the measures taken extra-judicially fail to recover the debt and the financial report (recommended) suggests that it would be worthwhile to continue pursuing the debtor, the next stage is to bring the matter before the courts.

This effectively means using the ‘Proceso Monitorio’ which is a special court process specifically set-up for the speedy resolution of outstanding debts which cannot exceed €250,000.

Upon presentation to the court of the petition together with supporting documentary evidence (contracts, invoices etc) the court will decide whether there is a sufficiently substantial case for the debt to be repaid.

The debtor is then informed by the court of the petition and at this stage there are three possible outcomes:

1. Debtor Agrees To Pay The Debt

In 45% of cases brought via the ‘proceso monitorio’ the matter is resolved at this point with the debtor agreeing to pay the creditor the amounts owed.

2. Debtor Does Not Respond or Appear in Court

If the debtor fails to respond to the court action or doesn’t turn-up at the hearing then the judge may place an embargo on any assets or income of the debtor to force repayment of the amount owed. 39% of cases are resolved in this fashion.

3. Debtor Opposes Payment of the Debt

If within a timeframe of twenty days the debtor opposes the action and does so in writing then it becomes necessary for the court to hear arguments from both sides. The debtor will require documentation to support their case. The debtor opposes the debt in this way in 16% of cases.

 

Support services

5Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

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