Debt Collection in Turkey

The Republic of Turkey is strategically located between Western Asia and Southeastern Europe. Sharing borders with eight countries (Armenia, Azerbaijan, Bulgaria, Greece, Georgia, Iran, Iraq, and Syria), Turkey possesses a strong economy, a large domestic market, a strategic geography, and a young, dynamic population. Additionally, it has become increasingly attractive to investors, consistently improving its ranking in the World Bank’s ease of doing business index. Turkey’s membership in numerous international organizations further positions it as an important trading partner for both goods and services. Within this context, debt collection is of significant importance for both local and international companies doing business in Turkey to maintain healthy operations. Timely collections support a company’s financial sustainability, while also contributing to transparency in customer relations, employee efficiency, and corporate reputation. However, as in any country, debts in Turkey may go unpaid or be subject to delays. In such cases, effective management of the debt collection process requires not only a solid understanding of legal regulations but also guidance from an experienced legal professional. The origin of a debt may include a contract between the parties, verbal declarations of intent, tort, unjust enrichment, unilateral legal acts, statutory obligations, or other sources. Under Turkish law, a creditor may pursue debt collection through enforcement proceedings without a judgment at enforcement offices or by filing a civil claim in local courts. Where appropriate, alternative methods such as arbitration or mediation may also be employed. Other enforcement methods include enforcement through the liquidation of pledged assets, bankruptcy proceedings, or special procedures for negotiable instruments such as promissory notes and checks; these methods are discussed in our separate writings.

Requirement of a Formal Warning

Legal actions to demand payment of a debt should begin with a formal warning if no maturity date has been agreed upon. The warning provides the debtor with a specified period to settle the debt. Failure to issue such a warning before initiating enforcement proceedings may result in the rejection of any lawsuit filed to annul the debtor’s objections. It should be noted that, for a debt that is not yet due, the payment order served within the enforcement proceedings may be considered equivalent to a warning. If the debtor has a registered electronic mail address (KEP address), the creditor may send the warning either through a notary public or via registered electronic mail. Turkish law requires all registered companies to maintain a KEP address.

Debt Collection through Enforcement Proceedings without a Judgment

Enforcement proceedings are a legal process that enables a person (the creditor) to collect their receivable from the person who owes them (the debtor) through the use of state authority. This process is based on the provisions of the Enforcement and Bankruptcy Law (İİK) and is carried out through enforcement offices. Enforcement proceedings without a judgment constitute a legal route that may be pursued only for the collection of monetary receivables and security claims, and no court decision or document is required for initiating such proceedings. The process is conducted by the enforcement office. Courts become involved only in cases of objection or complaint. The procedures in the enforcement office are as follows: The creditor files a request. Although the initial costs of enforcement proceedings are paid by the creditor, these amounts are later collected from the debtor. After the creditor submits the request, the enforcement office sends a payment order to the debtor. The debtor has the right to object to this payment order within seven days from the date of receipt. If no objection is made within this period, the proceedings become final, and enforcement continues through the attachment of the debtor’s assets and other enforcement measures to collect the debt. If an objection is raised, the entire process (proceedings) is suspended. In such a case, the creditor may, within six months from the date of objection, apply to the enforcement court for the temporary or permanent removal of the objection, or within one year from the date of objection, file a lawsuit before the court of first instance for the annulment of the objection. During the hearing, the creditor/plaintiff must present evidence to prove the validity of their claim. If the annulment lawsuit concludes in favor of the creditor/plaintiff, the decision becomes immediately enforceable against the debtor. Once the creditor brings the decision to the enforcement office and initiates the enforcement process, unlike the first method mentioned above, any subsequent objection by the debtor to the enforcement office will not be sufficient to suspend the ongoing enforcement proceedings.

Debt Collection through Civil Litigation in Turkey

A creditor may opt to collect the debt directly through a court judgment. In such cases, a debt claim must be filed in the competent and authorized court. This procedure is typically used when the existence or amount of the debt is uncertain, the debtor denies the debt, or the supporting documentation is insufficient. In the lawsuit petition, the creditor must detail the legal basis of the claim (contract, invoice, service agreement, or other documents) and submit supporting evidence. The court examines the parties’ statements and evidence, hears witnesses if any are presented, and may obtain expert reports or conduct inspections. If the court finds the debt valid, it issues a judgment in favor of the creditor. Unless legally required for finality, the creditor can enforce the judgment through judicial enforcement to collect the debt. Although this way may take longer than enforcement proceedings without a judgment, the existence of a court decision limits the debtor’s right to object, ensuring more secure debt recovery.

Precautionary Measures and Precautionary Attachment

A precautionary measure is a temporary protective action ordered by a court to prevent a plaintiff’s right from being harmed or to ensure that the eventual judgment is not rendered ineffective, either before a lawsuit is filed or after filing but prior to a final decision. This institution is regulated under Articles 389–399 of the Code of Civil Procedure (HMK). Under a precautionary measure, the court may, for example, suspend the transfer of real estate in the land registry, prevent the sale of a company’s assets, or temporarily freeze funds in a bank account. However, as a general rule, the court cannot issue a precautionary measure that resolves the substantive dispute itself.

According to Article 389/1 of HMK No. 6100, a precautionary measure may be granted in cases where changes in the current situation would make it significantly difficult or entirely impossible to exercise the right, or where delay could cause serious harm or prejudice. To obtain such a measure, there must be a right on which the precautionary measure is based and a valid reason for the measure. The party requesting the measure must explicitly state the grounds and type of precautionary measure in the petition and substantiate the merits of the case with legal evidence to the extent necessary for approximate proof.

Alternatively, a precautionary attachment involves temporarily seizing a debtor’s assets by court order to secure a monetary claim. Precautionary attachment is regulated under Articles 257–268 of the Enforcement and Bankruptcy Law (İİK). The purpose of this institution is to prevent the debtor from hiding, selling, or transferring assets to third parties, thereby securing the collection of the claim. To grant a precautionary attachment, the court considers whether the creditor has a specific monetary claim, whether this claim is not already secured by a pledge and is due, and whether there is a risk that the debtor may act in bad faith by disposing of, concealing, or transferring assets.

Debt Recovery via Arbitration

If a contract between the parties contains an arbitration clause, if a separate arbitration agreement has been signed, or if the parties have agreed to resolve the arising dispute through arbitration, the dispute is decided before an arbitration tribunal instead of the courts. Arbitration means that the parties agree to resolve the dispute before a panel of independent arbitrators rather than state courts. The decision issued as a result of the arbitration process can be enforced like a court judgment if an enforcement certificate is obtained from the court. The arbitration route is particularly preferred in international commercial contracts as a fast and confidential method of dispute resolution. During the arbitration process, the parties are free to determine the language of the proceedings, the applicable law, and the number of arbitrators.

Application to Mediation

Mediation is an alternative dispute resolution method that enables a dispute arising between the parties to be resolved with the assistance of a neutral and independent third party, called a mediator. The mediation process is implemented in two forms: “voluntary” and “mandatory (pre-litigation condition)”. As a rule, applying to mediation is voluntary. However, in order to reduce the workload of the judiciary, Law No. 6325, as amended by Law No. 7155 on 06.12.2018, introduced a “mandatory mediation” requirement as a precondition to filing a lawsuit for certain types of disputes. In particular, commercial receivable and compensation claims have been among the cases for which it is mandatory to apply to a mediator before filing a lawsuit since 2019 (Article 5/A of the Turkish Commercial Code No. 6102). If the parties reach an agreement in the presence of a mediator, the resulting agreement record may, depending on the situation, have the effect of a court decision or, upon obtaining an enforcement certificate, be considered enforceable as a court decision. If no agreement is reached, the mediator prepares a “non-agreement record,” and the parties may file a lawsuit using this document. The mediation process helps reduce the court’s workload, preserves the relationship between the parties, and saves both time and costs.

Recognition and Enforcement of Foreign Judgments

In order for a court or arbitration decision rendered abroad to have legal effect and consequences in Turkey, a recognition or enforcement lawsuit must be filed. This process is regulated under Articles 50–60 of the Law on Private International Law and Procedure (Law No. 5718 – MÖHUK). Recognition allows a foreign court decision to have the effect of res judicata or conclusive evidence in Turkey. Enforcement lawsuit allows the foreign judgment to be executable in Turkey. The documents generally required for recognition and enforcement are as follows:

• Foreign court decision,

• Document showing that the decision is final,

• Apostille certificate (where required),

• Notarized Turkish translations of the documents,

• Photocopy of passport or identity card,

• Power of attorney with photo and specific authority.

According to Article 54 of MÖHUK, for foreign court decisions to be enforceable in Turkey, the following conditions must be met: there must be a principle of reciprocity between the country where the decision was rendered and Turkey, the decision must not conflict with the jurisdiction of Turkish courts, it must not violate public order, and the defendant must have been duly summoned and had the opportunity to exercise the right of defense.

If an individual or company intends to collect a debt in Turkey based on a foreign court or arbitration decision, they must first obtain a court ruling in Turkey for the recognition and enforcement of that decision.

Assignment of Claim

The assignment of claim (Articles 183–194 of the Turkish Code of Obligations) refers to a legal transaction in which a creditor transfers an existing claim to a third party, resulting in a change of parties within the debt relationship. As a result of this transaction, only the status of the creditor changes; the debtor remains the same but is now obliged to pay the debt not to the former creditor, but to the new creditor who has acquired the claim. For the assignment of claim(receivable) to be valid, it must be made in writing pursuant to Article 184 of the Turkish Code of Obligations; otherwise, the assignment is null and void. The debtor’s consent is not required for the assignment; however, the assignment must be notified to the debtor. If no such notification is made and the debtor, acting in good faith, pays the debt to the former creditor, this payment is deemed valid, and the debtor is discharged from the obligation. Rights that are strictly personal in nature (such as claims for alimony or moral damages) cannot be assigned.

In commercial practice, the assignment of claims is a frequently used method to meet liquidity needs, provide loan security, or transfer claims collectively. In this way, a claim becomes an economic asset that can change hands like any other property, and creditors use this mechanism to accelerate cash flow, transfer collection risk, or facilitate their financial management.

Security Deposit Requirement and Exemption for Foreign Creditors

If there is no legal or de facto reciprocity between the creditor’s country (foreign natural or legal person) and the Republic of Turkey, the creditor is required to deposit security in order to initiate enforcement proceedings or file a lawsuit before Turkish courts. This security is generally set at around 20% of the disputed amount; however, the exact rate may vary at the discretion of the judge. The principle of reciprocity is based on whether the same legal opportunities granted to a foreign citizen in Turkey are also afforded to Turkish citizens in that foreign country. Detailed information regarding bilateral or multilateral agreements to which Turkey is a party, and which provide for exemption from such security requirements, can be found here.

Ultimately, debt collection in Turkey is a process that is highly detailed and comprehensively regulated under the legal framework. In order to prevent any loss of rights or claims on the part of the creditor, determining the correct strategy and identifying which method (enforcement, litigation, arbitration, or mediation) is appropriate requires a professional legal assessment.