Methods Of Debt Recovery in Turkey

According to Turkish Law, there are two main ways for dept recovery. First one is “Litigation Procedure” which will be examined by the Court and second one is “Debt Enforcement Proceeding” which will be provided by Administrative Body.

Advantage of filing an action of debt rather than debt enforcement procedure is to have an opportunity to implement interim measures against debtor*. Therefore, action of debt enables creditor to request interim measure against debtor in order secure its possible debt. Creditor must convince the court by proving necessity of interim measure and collection risk related to the debt. According to Turkish Law, interim measure enables creditor to secure his debt during the case by pledging over the debtor’s assets. To secure his dept creditor must prove that the debt is under risk.

In case that the court decides in favor of the creditor in connection with the debt, decision can be executed directly over the debtor. Subsequent to decision if the debtor shall not remit determined debt, assets pertaining to the debtor would be be easily seized and it can be converted to cash with attachment procedure.

Apart from action of debt, creditor can also apply to Debt Recovery Governmental Office in order to collect his debt. Upon an application, the department shall submit order of payment to the debtor. In case that debtor shall not object to the debt within seven days (for debts stemming from cheque, bonds this duration is limited to five days) subsequent to submission, the debtor shall be considered as a party recognizing alleged debt by the law. In this case, creditor can initiate attachment proceedings against debtor in order to recover the debt. On other hand, if the debtor objects to alleged debt, creditor must file an action of debt in order to prove the legitimacy of debt.

Subsequent to debtor’s objection, continuation of debt collection process can be solely provided by filing a case called as action of debt. in case of the litigation decision shall be in favor of creditor, unfair objection to the debt during debt execution procedure shall be subjected to the penal fee as 20% amount of the debt. If one of the party is a merchant or having a commercial legal entity in debt relation, component court must be commercial court rather than court of peace.

In case that debt stemming from a documents such as cheque, bonds etc, legal case must be filed by the creditor at enforcement courts. In these cases, debtor must prove that the signature on the document does not belong to him. The subject matter in this case can be only the validity conditions of the document rather than context of debt.

If the country of creditor applies some restrictions for Turkish legal entities for filing a case, Turkish court will request security deposit from the creditor. If judicial assistance agreement or relevant ratifications lacks between Turkey and third countries, there is a security deposit obligation which is %15 in practice for foreign legal entities.

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