Introduction

Debt collection in Turkey is governed by a structured legal system that includes multiple avenues for enforcing receivables. This article outlines the three main procedures available for debt recovery:

1. Debt Enforcement Proceedings (via governmental administrative offices)

2. Mandatory Mediation (for commercial disputes)

3. Litigation (through Turkish courts)

The article also covers important legal considerations for foreign legal entities and individual creditors, including the security deposit (Cautio Judicatum Solvi) requirement and applicable international agreements.

Legal Status of Foreign Creditors in Turkey

Foreign individuals and companies intending to initiate debt collection proceedings in Turkey must be aware of the Cautio Judicatum Solvi requirement if no judicial assistance agreement exists between Turkey and their country.

Legal Basis:

• Article 97 of the Turkish Code of Civil Procedure

• Article 32 of the Turkish Code of Private International Law

Security Deposit (Cautio Judicatum Solvi):

• Courts typically require a 15% deposit of the disputed amount.

• The purpose is to protect Turkish debtors from potential damage caused by foreign claimants.

• The deposit is refundable after the case or enforcement concludes.

Proof of Security Deposit May Include:

• Transfer to the Turkish Central Bank

• Bank guarantee letter

• Pledge on real estate

• Notary-approved guarantee

• Bill of exchange

Countries with Judicial Assistance Agreements with Turkey

Foreign creditors from the following countries are exempt from the deposit requirement:

Germany, UK, Italy, Switzerland, Ukraine, Romania, India, Bulgaria, Austria, Kazakhstan, Hungary, Azerbaijan, China, Iraq, Poland, and others.

Additionally, countries like Russia, Egypt, Chile, Finland, Libya, Peru, and Syria benefit from reciprocal exemption under Turkish law.

Debt Collection Methods in Turkey

1. Debt Enforcement Proceeding (Administrative Process)

Creditors can apply to the Enforcement Office (İcra Dairesi) to issue a payment order to the debtor.

• If the debtor fails to object within 7 days (or 5 days for debts from cheques or notarized documents), the debt is considered acknowledged.

• Creditors can then proceed with attachment and liquidation of the debtor’s assets.

• If the debtor objects, the creditor must initiate a debt litigation case in court.

If the debt is based on a cheque, promissory note, or notarized document, the case is filed at enforcement courts, and the debtor must disprove the document’s validity (e.g., signature not theirs).

2. Action of Debt (Litigation)

This procedure allows creditors to file a lawsuit directly against the debtor.

Advantages include:

• The ability to request interim measures (precautionary seizure of assets).

• Especially useful when there is a risk of asset dissipation.

To secure interim measures, creditors must prove:

• The existence of the debt

• The risk of non-collection

After a favorable court ruling, the decision can be executed through the Enforcement Office, and the debtor’s assets may be seized and liquidated.

3. Mandatory Mediation for Commercial Debts

Since 2019, Turkey has implemented mandatory mediation for commercial disputes.

Key points:

• Parties must apply to the Mediation Bureau before filing a lawsuit.

• A 6-week period is provided to reach a resolution.

• If no agreement is reached, litigation becomes permissible.

• The first 2 hours of mediation are funded by the Ministry of Justice.

• A skilled debt collection lawyer in Turkey can help navigate this phase effectively.

Which Court Has Jurisdiction?

• For commercial debt disputes, the competent authority is the Commercial Court, not the Court of Peace.

• If both parties are traders or commercial entities, this rule strictly applies.

Conclusion

Debt collection in Turkey involves a mix of administrative and judicial remedies, all of which must be handled in accordance with Turkish procedural laws. Foreign creditors must also be aware of security deposit obligations and mandatory mediation rules.