DEFAULT INTEREST IN CASE OF DEBTOR'S DEFAULT: CONDITIONS, RATE, AND COMMENCEMENT DATE OF INTEREST

1. The Concept of Debtor's Default

In a debt relationship, the debtor's primary obligation is to perform the undertaken act in accordance with the contract and the law, and within the agreed time. Failure to perform the debt on time, even after it has become due, constitutes default under certain conditions.

According to Article 117 of the Turkish Code of Obligations No. 6098, as a rule, the debtor of a due debt is considered to be in default upon the creditor's notice. However, if the date of performance of the debt has been predetermined by the parties, no further notice is required. In this case, default occurs automatically upon the expiration of the agreed-upon due date. Article 117 of the Turkish Code of Obligations also prescribes special default dates for debts arising from torts and unjust enrichment.

One of the most significant consequences of a debtor's default is the obligation to pay default interest.

The purpose of default interest is to compensate, to a certain extent, the creditor for the economic loss incurred due to the debtor's failure to pay the money on time. Therefore, default interest is considered an ancillary claim dependent on the principal monetary debt.

2. Default interest does not require fault on the part of the debtor

One of the key characteristics of default interest is that it can be claimed regardless of the debtor's fault.

When a borrower fails to pay a loan on time, the occurrence of default is sufficient for default interest to accrue. As a rule, the borrower's claim that they are not at fault for their inability to pay does not relieve them of the obligation to pay default interest.

In this respect, default interest differs from the delay damages regulated under Article 118 of the Turkish Code of Obligations (TBK). According to Article 118 of the TBK, if the debtor cannot prove that they are not at fault for the default, they are also obliged to compensate for the damages arising from the delayed performance.

Therefore, in terms of default interest, the creditor does not need to prove the damage and the amount of the damage.

3. Start Date of Default Interest

When determining when default interest should begin, the first step is to ascertain the date on which the debtor defaulted.

If there is a specific deadline

If the payment date for the debt is clearly specified in the contract, as a rule, the debtor defaults upon the expiration of the due date.

For example;

"The payment of 500,000 TL will be made on March 3, 2026."

If agreed upon, the debt becomes due on March 3, 2026, and in case of non-payment, default consequences generally occur upon the expiration of this date. In such cases, there is no need to send a notarized notice or initiate enforcement proceedings.

Article 117 of the Turkish Code of Obligations contains a clear regulation on this matter. The Supreme Court's practice also accepts that a separate notice is not required for monetary debts with a predetermined payment date.

If there is no specific deadline

If the payment date for the debt is not predetermined, as a rule, the debtor should be put in default.

For this purpose, the creditor can send a notice to the debtor demanding payment. The notice;

• notary notice,
• written payment request,
• enforcement proceedings, to the extent that the conditions exist,
• case,

This can be accomplished through methods such as these.

However, the nature of the claim must be assessed separately in each specific case.

Therefore, when requesting interest in a lawsuit or enforcement proceeding, automatically requesting "interest from the date of the lawsuit" may not be correct. If the debtor has previously defaulted, interest can be requested from the date of the previous default.

4. How is the default interest rate determined?

When determining the interest rate to be applied for default, the following points are primarily considered:

1. Whether the debt is of a commercial nature,
2. Whether the parties have specified an interest rate in the contract,
3. Whether or not there is contractual interest,
4. Whether a specific legal provision exists

It should be examined.

Therefore, it is not possible to apply a single interest rate to all monetary debts.

5. Legal Default Interest in Ordinary Transactions

According to Article 120/1 of the Turkish Code of Obligations, if the applicable annual default interest rate is not agreed upon in the contract, it is determined according to the legislation in force on the date the interest obligation arose.

At this point, Law No. 3095 on Legal Interest and Default Interest comes into play.

According to Article 2 of Law No. 3095, unless the parties agree otherwise, a debtor who defaults on a payment of a sum of money is obliged to pay default interest at the rate determined in Article 1 of Law No. 3095.

With Presidential Decree No. 8485, the statutory interest rate 24% per annum as of June 1, 2024. This rate will be in effect as of July 23, 2026.

Accordingly, in monetary debts that are not of a commercial nature and are not subject to a specific interest rate arrangement, a statutory default interest rate of 24% is applied as a rule, unless a different applicable default interest rate has been agreed upon between the parties.

6. If default interest is agreed upon in the contract

The parties may specify the default interest rate separately in the contract.

In ordinary jobs, this freedom is not unlimited.

According to Article 120/2 of the Turkish Code of Obligations, the annual default interest determined by contract cannot exceed one hundred percent of the statutory annual interest rate.

Considering that the general legal interest rate is currently 24% per annum, the upper limit for default interest to be determined by contract in ordinary debt relationships to which Article 120/2 of the Turkish Code of Obligations applies is, as a rule:

24% + 24% = 48% annually

will be.

However, consumer transactions, bank loans, credit cards, and other legal relationships regulated by special laws also require a separate examination of the relevant specific legislation.

7. If the contract includes contractual interest but no default interest

Article 120/3 of the Turkish Code of Obligations contains an important provision.

Accordingly, even if the parties have agreed on a contractual interest rate in the contract but have not specified a default interest rate, and the agreed contractual interest rate is higher than the statutory default interest rate, the contractual interest rate shall also apply during the default period.

Similarly, Article 2/3 of Law No. 3095 stipulates that in cases where default interest is not agreed upon in the contract, if the contractual interest rate is higher than the statutory rates, the default interest cannot be lower than the contractual interest rate.

For example, if the statutory interest rate is 24%, and the parties have legitimately agreed on an annual interest rate of 30% but have not separately agreed on default interest, the default interest rate will not be reduced to 24% as a rule; the annual rate of 30% will remain in effect.

8. Default Interest in Commercial Transactions

In commercial transactions, the provisions of the Turkish Commercial Code must also be taken into consideration regarding interest rates.

Turkish Commercial Code Article 8/1;

"Interest rates in commercial transactions are freely determined."

It includes the provision.

Article 9 of the Turkish Commercial Code (TTK) states that in commercial transactions, the provisions of the relevant legislation regarding legal interest, principal interest, and default interest shall apply. According to Article 10 of the TTK, unless otherwise agreed, interest on a commercial debt begins to accrue from the expiry of the due date; if no specific due date exists, it begins to accrue from the date of the notice.

In the practice of the Supreme Court's General Assembly of Civil Law, the freedom to pay interest under Article 8 of the Turkish Commercial Code is particularly important in contracts where both parties are merchants and the transaction is of a commercial nature. The General Assembly of Civil Law has issued rulings stating that the limitations in Articles 88 and 120 of the Turkish Code of Obligations cannot be directly applied to commercial transactions.

Therefore, in commercial transactions, if a default interest rate is explicitly specified in the contract, the enforceability of that contractual provision should be investigated first.

9. Advance Interest in Commercial Transactions If No Interest Rate is Specified in the Contract

Article 2/2 of Law No. 3095 provides a special provision for commercial transactions.

Accordingly, if the interest rate applied by the Central Bank of Turkey (TCMB) for short-term advance transactions on December 31 of the previous year is higher than the general statutory interest rate, default interest in commercial transactions can be demanded at that rate, even if there is no interest clause in the contract.

With the regulation put into effect by the Central Bank of the Republic of Turkey on December 20, 2025;

• annual discount rate in rediscount transactions %38,75,
• annual interest rate on advance transactions %39,75

It has been determined as follows.

Therefore, for the year 2026, it is possible to charge an annual advance interest rate of 39.75% on commercial monetary debts where the conditions are met and unless another applicable rate is specified in the contract

It is important to note here that "rediscount interest" and "advance interest" should not be confused. The rate used as the basis for commercial default in Article 2/2 of Law No. 3095 is advance interest.

10. Special Default Interest in the Supply of Goods and Services within the Scope of Article 1530 of the Turkish Commercial Code

In terms of commercial relations, Article 1530 of the Turkish Commercial Code should also be considered specifically.

In transactions between commercial enterprises for the supply of goods and services, if the creditor has fulfilled their contractual obligation but the debtor fails to make their payment on time, the debtor may be deemed in default without the need for a warning, under the conditions stipulated by law.

According to the regulation published by the Central Bank of the Republic of Turkey in the Official Gazette dated January 2, 2026, and numbered 33125, for the year 2026, within the scope of Article 1530/7 of the Turkish Commercial Code;

Default interest rate to be applied to late payments in the supply of goods and services: 43% per annum

The minimum amount I can claim for debt collection expenses is: 2,020 TL

These rates have been determined and are valid from January 1, 2026.

Therefore, it is not possible to directly apply a 43% interest rate to every commercial debt. This rate is specifically intended for late payments arising from the supply of goods and services under Article 1530 of the Turkish Commercial Code

11. Charging interest on interest is generally not possible

As a general rule in Turkish law, default interest cannot be charged on top of default interest.

Article 121 of the Turkish Code of Obligations clearly states:

"No further interest can be charged on default interest."

It includes the provision.

Law No. 3095 also stipulates that compound interest cannot be applied when calculating statutory interest and default interest.

In commercial transactions, Article 8/2 of the Turkish Commercial Code permits compound interest only under certain and limited circumstances. According to this article, adding interest to the principal and charging further interest for a period of not less than three months is only possible in current accounts and loan agreements that are commercial transactions for both parties, and under the conditions stipulated by law.

Therefore, finding a business opportunity alone does not entitle one to charge unlimited compound interest.

12. Correctly Establishing Interest Claims in Litigation and Enforcement Proceedings

When a debt is subject to litigation or enforcement proceedings, the claim for interest should not be limited to a general statement such as "including legal interest.".

First, you will receive;

• Is it from a shady job?
• from a commercial business,
• Is it from the supply of goods or services within the scope of Article 1530 of the Turkish Commercial Code?
• from a consumer transaction,
• From a bill of exchange?
• from a tort?
• from unjust enrichment?

The source must be determined.

Later in the contract;

• maturity,
• contractual interest,
• default interest
• late payment interest or late payment penalty

It should be checked whether it is present or not.

Accordingly, the interest commencement date and the type of interest must be determined separately.

For example, in a commercial monetary receivable, if the conditions are met, the claim;

"The defendant shall be ordered to pay commercial default interest calculated from the default date of 03.03.2026, which is 500,000 TL, taking into account changing rates, in accordance with Article 2 of Law No. 3095, using the interest rate applied by the Central Bank of Turkey for short-term advance transactions."

Establishing it in this way will protect the creditor's rights more strongly than simply stating "with legal interest.".

However, if the receivable arises from the supply of commercial goods or services within the scope of Article 1530 of the Turkish Commercial Code, the special late payment interest rate of 43% per annum for the year 2026 should be considered separately.

13. Conclusion

There is no single rate for determining the interest rate to be applied in case of debtor default. First, the source and legal nature of the debt must be determined.

In general terms as of July 23, 2026;

Legal default interest rate for ordinary transactions: 24% per annum.

The CBRT advance interest rate that can be requested in commercial transactions under Law No. 3095 is 39.75% annually

Late payment interest rate for goods and services procurement under Article 1530 of the Turkish Commercial Code (TTK) in 2026: 43% annually

It appears as follows.

However, if a different interest rate has been validly determined in the contract, the provisions of the contract must be evaluated together with the limitations in the Turkish Code of Obligations, the Turkish Commercial Code, Law No. 3095, and any special laws, if applicable.

The fundamental distinction regarding the starting date of default interest is whether the debt has a fixed term or not. If there is a fixed term, default generally occurs upon the expiration of the term without the need for further notice. If there is no fixed term, the debtor must generally be put into default through a notice.

Therefore, in lawsuits and enforcement proceedings, determining also the correct date of default is one of the fundamental legal issues that directly affects the amount of the debt.