One of the most commonly used methods for debt collection in Turkey is through enforcement proceedings. Creditors can initiate enforcement proceedings regardless of whether they possess any documentation. However, if the debtor raises an objection, the creditor will need evidence to prove their claim. Such evidence could include negotiable instruments like cheques and promissory notes, as well as documents like rental agreements or bank statements that demonstrate the existence of a rental relationship. A creditor with sufficient documentation can apply to the enforcement office to initiate debt collection. If the debt is based on a document, it will be examined whether the parties can be involved in the enforcement proceedings and whether the proceedings meet the legal requirements. For instance, enforcement proceedings cannot be initiated against a deceased person, so the heirs of the deceased will be parties to the proceedings. If the enforcement officer deems that the application meets the legal requirements, a payment order will be issued and notified to the debtor.
In Turkey, debt collection is governed by the Turkish Code of Civil Procedure, and the legal system provides several options for creditors to collect debts owed to them.
Upon receiving the payment order, the debtor has seven days to raise an objection. If no objection is made, the proceedings become final, allowing the creditor to seize and sell the debtor's assets to satisfy the debt. In the event of an objection, the creditor must apply to the court to have the objection removed. If the court rules in favour of the creditor, the debtor's assets can be seized. If the debt is based on a court or arbitration decision, the debtor's objection will be reviewed in a limited scope.
Debt Collection Through Litigation
Another option for debt collection in Turkey is through litigation. Creditors who do not wish to pursue enforcement proceedings without a court decision, or who have doubts about the amount and existence of the debt, may opt for litigation. In such cases, the creditor submits a statement of claim and supporting evidence to the court. After examining the documents and determining that the case meets legal requirements, the court will notify the defendant of the claim and request a response along with any supporting documents. In simple trial procedure cases, the submission phase consists of one statement of claim and one response, while in written trial procedure cases, each party is entitled to submit two pleadings. After the submission phase, the trial proceeds to the collection of evidence, including inspections and expert reports, culminating in the judge's decision. The decision may be appealed. Once a decision is obtained, the creditor can either communicate with the other party for payment or proceed with enforcement through the enforcement office.
Alternative Methods for Debt Collection
In addition to litigation and enforcement proceedings, other methods are available for debt collection, including:
1. Debt Collection Through Arbitration: Parties may agree to resolve their dispute through arbitration either before or after the dispute arises. Arbitration can be stipulated as a clause in an existing contract or through a separate arbitration agreement. Although direct application to arbitration without a prior agreement is possible, if the other party objects, the dispute cannot be resolved through arbitration. In arbitration, parties present their statements and evidence to the arbitrators, who review the documents and invite the parties for oral hearings. Arbitration offers a quicker resolution compared to traditional litigation, and an arbitration award can be enforced with a court-issued enforcement order.
2. Debt Collection Through Mediation: Mediation regulations are continuously expanding, with various dispute types being brought under mandatory mediation. Whether mandatory or voluntary, debt collection can also be achieved through mediation. In this method, the parties apply to a mediator who facilitates dialogue between them. Through dialogue, the parties can agree on payment amounts, timelines, and methods, thereby resolving the dispute. If the parties reach an agreement, they are likely to adhere to it. If not, the creditor can apply for an enforceable order from the court and initiate enforcement proceedings based on the mediation agreement, similar to a court decision.
3. Debt Collection Through Assignment of Debt: Debt assignment involves the creditor transferring their receivables from the debtor to a third party for a specified amount. The purpose of this method is to enable the creditor to quickly collect part of the debt by transferring it to a third party. However, this method requires the creditor to forgo a portion of the debt. For instance, a creditor with a receivable of 100,000 TL may transfer the debt to a third party for 50,000 TL, and the creditor can no longer claim the debt from the debtor. The third party who assumes the debt can initiate legal proceedings to collect the full amount from the debtor. The debtor cannot object to the debt assignment and must fulfil their obligation to the third party, though they can assert any defences they had against the original creditor. The assignment of debt must be in writing; otherwise, it is invalid.
Debt collection in Turkey can be carried out through various methods, including enforcement proceedings, litigation, arbitration, mediation, and assignment of debt. Each method offers different advantages and disadvantages to the creditor. Enforcement proceedings are a swift and effective method and can be initiated even without documentation, though objections from the debtor may require court intervention. Litigation is an alternative for those who prefer a court decision or have doubts about the debt's amount. Arbitration and mediation provide amicable and expedited resolutions, while debt assignment allows for quick collection at the cost of relinquishing part of the debt.
For further information and legal assistance from our experienced Turkish lawyers in Istanbul, Izmir, Ankara, or other cities in Turkey, please contact us.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.