Debt Collection in Turkey
Debt Collection in Turkey: Complete Legal Guide for Creditors and Foreign Companies
This article explains the legal framework for debt collection in Turkey, including administrative enforcement, mandatory mediation, and litigation procedures. It also outlines applicable fees, power of attorney (POA) requirements, and the security deposit obligations for foreign claimants under Turkish law.
1. Overview of Debt Collection in Turkey
In Turkey, creditors can initiate debt recovery through three legal channels:
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Administrative Debt Execution Procedure (via execution offices),
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Obligatory Commercial Mediation (for commercial disputes),
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Litigation before Turkish Courts.
Each method has distinct steps and legal implications, which are elaborated below.
2. Administrative Debt Execution Procedure
The fastest way to initiate a debt claim in Turkey is by applying to a governmental debt execution office. A Turkish lawyer will file a request, and the execution office will send a payment order to the debtor by official registered mail.
If the debtor does not object within:
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7 days for ordinary debt claims, or
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5 days for bills of exchange (limited objection grounds: signature, form, validity),
the creditor may proceed to seize the debtor’s assets.
If the debtor objects, the process is frozen, and the creditor must initiate litigation.
3. Mediation: Mandatory Step for Commercial Disputes
Before going to court in commercial cases, parties are required to attend mandatory mediation, per Turkish law.
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The first 2 hours of mediation are free of charge (covered by the Ministry of Justice).
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Mediation lasts up to 6 weeks.
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If parties reach a settlement, the agreement becomes legally binding, like a court decision.
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If no agreement is reached, the mediator issues a non-settlement report, allowing parties to proceed to court.
4. Litigation Process in Turkey
Litigation is governed by civil procedure rules. If the case proceeds to court (either directly or after objection during execution), the following steps occur:
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The court examines evidence such as contracts, invoices, emails, accounting records.
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Both parties may file claims and counterclaims.
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Hearings are held in person, and the decision is issued based on submitted documentation and witness/expert opinions.
⚖️ Penalty for Unjustified Objection
If the court rules in favor of the creditor, and it is proven that the debtor’s objection was unjustified, the debtor may be ordered to pay a 20% penalty of the debt amount.
5. Fees and Costs
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Administrative execution fee: ~0.05% of the debt + ~€10.
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Court litigation fee: 59/1000 of the debt.
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Additional fees: expert fees, posting, and court notices.
Only 25% of the litigation fee must be paid to initiate a case; the remainder can be paid later.
6. Power of Attorney (POA) Requirements
Debt collection and litigation procedures must be initiated by a Turkish attorney authorized by a valid POA.
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Turkish citizens/legal entities: Can obtain POA from Turkish consulates.
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Foreign citizens/entities: Must obtain POA from their country’s competent notary or public authority.
✅ Important: The POA must carry an Apostille (if the issuing country is a party to the Hague Convention) or be certified by a Turkish consulate for validity in Turkey.
7. Security Deposit for Foreigners (Cautio Judicatum Solvi)
According to Article 97 of the Turkish Code of Civil Procedure and Article 32 of the International Private Law, foreign entities may be required to deposit security to file a case in Turkey, unless:
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There is a judicial assistance agreement, or
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There is reciprocity between Turkey and the country of the claimant.
💰 Security Deposit Practice:
Courts typically order 15% of the disputed amount as a deposit. This can be paid via:
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Transfer to Turkish Central Bank,
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Bank guarantee,
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Real estate pledge,
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Notarized bond or promissory note.
This amount is refunded after case resolution.
8. Countries Exempt from Security Deposit
Countries with judicial assistance agreements with Turkey (no deposit required): Germany, UK, Ukraine, Italy, Bulgaria, Kazakhstan, Azerbaijan, China, Switzerland, North Cyprus, Iraq, etc.
Countries exempt due to reciprocity: Russia, Egypt, Chile, Finland, Peru, Syria, Libya.
Conclusion
Foreign and domestic creditors can recover debts in Turkey through:
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Government-backed execution procedures,
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Mandatory mediation for commercial disputes,
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Court litigation with local legal counsel.
Turkish legal procedures are creditor-friendly, but require strategic legal planning, valid power of attorney, and in some cases, security deposits for non-Turkish claimants.