Debt Collection and Foreclosure
Debt Collection in Turkey
Turkey and Germany are close trading partners. There are transactions (export) from large companies as well as from medium-sized and small companies or real people. According to the Turkish Ministry of Finance, the value of exported goods in 2016 was 21.5 billion euros (second country after China), while the value of imports was 14 billion euros. Germany is the sixth country that invests directly in Turkey.
Because of these trade relationships, debts and claims may not be always settled in a timely and proper manner. In this regard, international merchants may need legal assistance to manage payments, tie contracts and collateral, and pursue non-payment procedures through enforcement proceedings.
As a precautionary measure, we recommend people, who will do commercial business with private individuals or companies in Turkey to conduct legal transactions with those authorized to represent companies. Before concluding the business, you should check your assets, tax number, whether the company is registered in the central register entry system and, the identification number, and you should secure yourself with the contracts that you conclude.
In practice, we have had the experience that many foreign companies, that have entered a business relationship with a Turkish company or Turkish partner, have suffered losses as a result of the business agreements they have entered into because they were not able to fully understand the structure and volume of the Turkish company or the Turkish Partners. The foreign company in Turkey has to issue an order for payment through a notary and / or initiate enforcement proceedings and / or is forced to sue against the companies or persons who do not pay the claims or who do not deliver the goods on time.
Out-of-Court Dunning Notice According to Turkish Law
Sending a reminder by a notary is often a legal remedy that the creditor uses to put the debtor in default in the case of indefinite due dates. It is an extrajudicial remedy that the creditor uses to warn the other party to comply with their obligations, one last time before filing a lawsuit. The creditor does not necessarily have to resort to this route. The reason for issuing a dunning notice through a notary is, that the receipt of the notice by the other party and the content of it can be proven.
The creditor can also send this reminder to the debtor by registered letter if the debtor has a registered e-mail address (“KEP address”). It is prescribed by law that registered corporations in Turkey must have a so-called KEP address.
Court Order for Payment
In the case of enforcement proceedings in Turkey, the creditor first sends the debtor an order for payment through the enforcement authority and attaches the documents stating the debt. The debtor who accepts the order for payment by serving has an objection period of seven days. The debtor usually does not have to give a reason for his objection. However, if the debtor has raised an objection in bad faith, the creditor may bring an action to annul the objection and if he wins the complaint, the creditor is also entitled to compensation of up to 20%.
The order for payment becomes legally binding if an objection is not raised against the enforcement procedure within seven days and the creditor may question all of the debtor’s assets and prove the determined assets with foreclosures. The debtor’s assets, which can only be researched to a limited extent before the order for payment is issued, can at this stage be more extensively researched by the creditor using the enforcement authority’s system. The ascertained assets can be attached immediately. These seized goods are then auctioned or sold by the enforcement authority at the request of the creditor and the creditor receives the proceeds.
Interim Injunction according to Turkish Law
In the statutory period after the enforcement procedure has been initiated to the detriment of the debtor, the bad faith debtor can transfer the property intended for enforcement to another person or arrange for the property to be disposed of. For example, the debtor can sell their home or car, withdraw their money from their bank accounts, sell their stocks on the stock market, and sell their valuable and saleable movable property. In order to prevent the debtor from selling his property, before the enforcement order experience, a precautionary attachment can be obtained against the debtor.
It is necessary to mention that an attachment cannot be requested for every claim. It must be based on the document (check, promissory note, bond, etc.) and the title. In order to be able to place a temporary attachment against the debtor, the claim may not be pledged. The second requirement for real security arrest is the due date of the claim. If the claim is not due, an attachment cannot be applied for.
The attachment can be requested with an application to the local court or the commercial court. This application will be examined in the files without a hearing and a decision will be made if the requirements are met. The decision on an attachment is subject to a security condition. The guarantee shall consist of payment by the creditor of ten or fifteen percent of the claim or the presentation of a bank guarantee certificate. The purpose of the collateral is to remove the disadvantage of the debtor in the event of an unjustified attachment. After the enforcement has come into effect, the security payment can be withdrawn upon application to the court.
Recognition and enforcement action for foreign court orders
If the creditor in his country files and wins a claim against the debtor in Turkey and this becomes final, he can open foreclosure proceedings in Turkey and initiate the enforcement of the decision.
Our services with regards to debt collection are:
- Asset research about claims and debtors
- Possible securing of mutual contractual obligations
- Judicial and extrajudicial dunning procedures
- An interim injunction under Turkish law
- Action for recognition and enforcement of foreign court orders
- Effective realization of demands
How can you entrust Koca & Ersöz with legal representation?
In principle, a notarial power of attorney (at the Turkish consulate or at a German notary with apostille) has to be given before starting a legal activity. You will receive the sample power of attorney from us.
I have legal expenses insurance. How about that?
Initially, authorization is not required for the consultation. But it does for judicial representation! Give us a copy of your insurance policy or contact your legal protection insurance company yourself to obtain a commitment to cover costs. As a rule, this will be given, unless there is a contractual exclusion of your legal dispute.
Foreclosure in Turkey: We are fighting for a safe settlement
If claims are not paid, foreclosure in Turkey is usually the last resort. Different goods can be enforced. In addition to the enforcement of houses and apartments, this can also affect land and valuables. As a creditor, it is your right to settle your claims through foreclosure in Turkey. We are at your side here.
We are nationally active.
As in any other European country, foreclosure in Turkey is, of course, subject to strict requirements and laws. As experienced lawyers, we know the peculiarities that go with every enforcement and help you to enforce your claims. Our lawyers accompany the foreclosure nationwide.
We offer our legal consulting services at a flat fee or hourly rate. We offer various consultation models! You can inform us about the subject by email or by filling out the form below and request a cost estimate, or call us at +90 212 660 49 00 (Istanbul) or +49 30 677 901 90 (Berlin), or send us a message through our WhatsApp hotline at +90 543 449 49 00 to arrange a consultation appointment.