Debt Collection from Turkey in International Trade
In the challenging arena of international trade, the process of debt collection from debtors in Turkey contains unique procedures and legal intricacies that businesses must navigate with care. Spanning from enforcement proceedings to debt collection lawsuits, this process requires comprehensive knowledge of both international treaties and trade practices, as well as the domestic legal system and enforcement strategies applicable in Turkey. Çetin Attorney Partnership offers effective, uninterrupted, transparent, and comprehensive legal services to creditor companies based outside of Turkey, leveraging its extensive expertise in both international commercial procedures and local Turkish law.
In Turkey, collection procedures can be legally multilayered and complex. However, before resorting to legal action, we believe it is essential to consider the possibility of collecting debts through negotiation with the debtor. This method can often result in unexpectedly fast and cost-effective debt recovery. A professionally drafted email, phone call, or written notice sent by a specialized law firm to the debtor may lead to a swift resolution.
Once legal avenues are pursued, an enforcement order is served to the debtor through the enforcement office. This order includes a specific period during which the debtor may raise objections. If this period lapses without objection, the creditor may proceed to impose liens on the debtor’s assets, freeze and seize bank accounts, and liquidate assets for debt repayment. Given the complexity and importance of such legal procedures, a deep understanding of the Turkish debt collection framework is critical for businesses aiming to protect their financial interests and ensure operational continuity.
This comprehensive guide prepared by Çetin Attorney Partnership aims to outline the key strategies for successful debt collection from Turkey, explain the critical role of legal services and specialized law firms, and highlight the benefits of obtaining expert support.
Understanding Commercial Debt Collection from Turkey
In Turkey, companies must be familiar with two primary enforcement procedures for commercial debt collection: “non-judicial enforcement” (without a court judgment) and “judicial enforcement” (with a court judgment). The selection of the appropriate method depends on the existence of an enforceable court decision and the nature of the debt.
1. Non-Judicial Enforcement (Without Court Judgment):
General Seizure Procedure: The creditor initiates the process by submitting a “payment order request” to the relevant enforcement office. A payment order is served to the debtor, who may object within a legally prescribed period. If an objection is raised, the enforcement is suspended, and the creditor must file a lawsuit to have the objection annulled or lifted.
Enforcement Based on Negotiable Instruments: This procedure applies specifically to debts arising from checks, promissory notes, bills of exchange, and bills of lading. In this type of enforcement, the debtor cannot object through the enforcement office but must instead file a lawsuit. This makes it a significantly stronger enforcement method.
2. Judicial Enforcement (With Court Judgment):
Since this procedure is based on an enforceable court decision, it provides a faster enforcement process. Objections are only permitted under very limited conditions, making this form of enforcement effectively final.
3. Mandatory Mediation:
As of January 1, 2019, mediation has become mandatory prior to filing lawsuits in commercial disputes. This alternative dispute resolution method aims to reduce the burden on courts and to foster amicable settlements between parties.
4. Security Requirement for Foreign Legal Entities:
Foreign legal or natural persons are required to deposit security when initiating lawsuits, unless their country has a judicial assistance treaty with Turkey or if exempt based on the principle of reciprocity.
5. Provisional Legal Protection Measures (Preliminary Injunctions):
Creditors may request temporary legal protection measures to secure the debt against the debtor. These may include precautionary attachment of the debtor’s assets.
6. Submission of Evidence in Enforcement Proceedings:
When the debtor objects to the debt, the creditor must present supporting evidence, such as promissory notes, contracts, emails and correspondence, lease agreements, or bank receipts.
7. Pre-Litigation Procedures:
Creditors generally begin with informal oral or written payment demands addressed to the debtor. If this yields no result, formal payment notices with defined deadlines are issued.
8. Direct Enforcement:
Known for being simple, fast, and low-cost, this enforcement can be initiated without any document proving the debt. However, if the debtor raises an objection, the process must continue through a (temporary or final) court decision.
9. Out-of-Court Notices (Formal Notices):
These are official reminder letters sent by notary or registered mail to the debtor before initiating a lawsuit, thereby formalizing the collection process.
10. Issuance of Payment Orders:
If the debtor fails to pay despite the formal notice, the creditor may request the enforcement office to serve a payment order. If the debtor does not object within 7 days, the creditor obtains the right to investigate, seize, and liquidate all the debtor’s assets.
11. Attachment Orders (Precautionary Seizure):
The creditor may request a precautionary attachment order before the enforcement decision becomes final, to prevent the debtor from transferring assets.
12. Litigation and Enforcement Procedures for Foreign Creditors:
Foreign creditors may initiate lawsuits or enforcement proceedings in Turkey. However, in the absence of a reciprocity agreement or in cases where the debtor has no assets in Turkey, a security deposit may be required.
Understanding these enforcement methods and the associated procedures is essential for businesses seeking to manage the debt collection process effectively in Turkey. Ensuring that documents such as contracts and invoices are prepared in advance and addressing potential language and cultural barriers is also crucial.
The Role of Law Firms in Debt Collection Procedures in Turkey
Professional law firms play a vital role in the debt collection process in Turkey. These firms implement various strategies and legal measures to recover debts for both domestic and foreign businesses. Çetin Attorney Partnership provides legal representation and consultancy services to foreign-invested and non-resident companies and carries out professional efforts to secure the fastest and most cost-effective recovery of receivables.
Accordingly, initial steps involve out-of-court negotiations and issuing notices to recover the debt without resorting to enforcement offices or courts. If needed, enforcement or court proceedings are subsequently initiated. Çetin Attorney Partnership applies its legal expertise throughout the entire process.
Services Provided by Çetin Attorney Partnership in This Field
Çetin Attorney Partnership offers a wide range of services aimed at ensuring fast, transparent, and effective debt collection. In complex debt recovery processes, the guidance of an experienced and qualified law firm is invaluable.
Assessment of Mutual Obligations: A legal opinion is provided based on an analysis of all written communications (contracts, emails, WhatsApp messages, etc.) in accordance with both international and Turkish law.
Asset Investigation: Comprehensive investigations are conducted to evaluate the debtor’s financial situation and assess the credibility of the debt claim.
Litigation and Non-Litigation Procedures: Both formal legal actions and out-of-court demands are undertaken.
Provisional Remedies: Turkish law provisions on precautionary measures are utilized to prevent the debtor from disposing of assets.
Debt Recovery Execution: Effective strategies are applied to enforce creditor rights and collect outstanding debts.
Recognition and Enforcement of Foreign Court Judgments: Assistance is provided in the recognition and enforcement of foreign court decisions within Turkey.
With these strategies and the involvement of expert legal professionals, businesses can make their debt recovery efforts in Turkey more efficient and resolve financial disputes swiftly.
Corporate Cooperation with Çetin Attorney Partnership
Cost Efficiency:
One of the most attractive reasons to obtain legal and consultancy services from Çetin Attorney Partnership for commercial debt collection is the substantial cost savings. In-house debt recovery operations entail additional expenses such as staffing, training, and system maintenance. Professional services eliminate these burdens and allow internal resources to focus on core business activities.
Higher Collection Success Rates:
A specialized law firm typically achieves higher success rates than in-house efforts. Their expertise and experience in handling complex cases contribute significantly to these outcomes.
Faster Collection:
Involvement of a professional service prompts debtors to respond more quickly and clearly, accelerating the collection process. This is critical for preserving cash flow and ensuring operational stability.
Technological and Legal Advantages:
Çetin Attorney Partnership uses advanced software and technology tools to optimize debt collection processes.
All activities are conducted in compliance with the law, thereby avoiding potential legal sanctions and protecting the creditor’s reputation and legal rights.
Conclusion
Collecting commercial debts from Turkish debtors is equivalent to succeeding in a legally complex field. Mastering the legal aspects of commercial relationships, deeply analyzing and interpreting the process from a legal perspective, maintaining expertise in legal procedures, being attentive to client relations, and taking the right strategic steps all contribute to the successful recovery of debts.
The comprehensive strategies described in this guide offer a roadmap from understanding enforcement methods to leveraging professional collection services. The objective is not only to recover debts but also to preserve brand reputation and client relationships.
In this complex environment, obtaining corporate legal representation and consultancy services is the most critical component of the process. Our expertise ensures faster and more effective debt recovery while maintaining legal compliance.
Companies based outside of Turkey that are unable to recover their commercial receivables from a Turkish company in a timely manner may contact our law firm, which provides effective, institutional, prompt, cost-efficient, and transparent services in this field, at info@cetinavukatlik.com to obtain detailed information.