Legal Process in Debt Collection

According to Turkish law, creditors have the right to collect their debts in two ways. Firstly, they can initiate legal proceedings by filing a debt collection lawsuit before local courts. Secondly, they can initiate enforcement proceedings (unstable enforcement) through enforcement offices. Before examining these methods, it should be noted that those who file lawsuits or initiate enforcement proceedings in civil courts, or a foreign legal entity or entity ("Plaintiff"), are required to deposit a security deposit, except in legal or illegal circumstances.

 

In addition, these warnings must also be communicated to the debtor: Any objection regarding the credit or jurisdiction of the enforcement office must be made to the Enforcement Court within 5 days of the notification date; enforcement proceedings will proceed unless a court decision is issued accepting the objection (Article 168/2 of the Enforcement and Bankruptcy Law). If the debtor's objection is rejected and a claim for compensation is made, the court will also award compensation to the creditor. The compensation amount cannot be less than 40% of the claimed amount (Articles 170/2 and 169a/6 of the Enforcement and Bankruptcy Law).

 

Enforcement proceedings involving negotiable instruments have an advantage compared to other enforcement methods. This is because it is time-consuming, and a complaint against the enforcement procedure can be filed within 5 days, and the enforcement proceedings continue until a decision is obtained from the court. Enforcement proceedings are carried out until the stage of realization of the seized assets (Article 169 of the Enforcement and Bankruptcy Law). Upon rejection of the objection, the creditor can claim that the attached assets have been realized. Even if the debtor appeals, the enforcement proceedings do not stop, including the auction and sharing of the sale value (Article 169/a of the Enforcement and Bankruptcy Law). In this case, the enforcement proceedings only stop if the debtor provides security that guarantees the creditor's claim (Article 33/3 of the Enforcement and Bankruptcy Law).

 

Therefore, this enforcement proceeding is a way to immediately collect the debt. Because the enforcement proceedings are ongoing, the debtors' assets are seized as a result. The practical outcome is that, after the seizure, the proceeds from the sale of the seized assets will be given to the creditor who applied the initial attachment to the assets. When the invoices lose the characteristics of negotiable instruments, or when the creditor does not possess any negotiable instruments, the creditor may apply for ordinary enforcement proceedings with an attached claim. However, ordinary enforcement proceedings must be stopped upon the debtor's objection. As a result, the creditor cannot continue the enforcement proceedings until the objection is dismissed by the court. Therefore, the time limit for negotiable instruments is of great importance in enforcement proceedings.

 

If a creditor possesses a legally binding asset, they may request a precautionary supplement (Articles 257-258 of the Turkish Enforcement and Bankruptcy Law). In this case, the creditor must prove that the claim is valid and that the invoice was presented but not paid. Unpaid invoices and checks must be proven with a protest and a declaration of dishonor. Alternatively, the claim is not valid, but the debtor does not have a registered address, or the debtor may transfer their property to avoid payment. In this case, a precautionary supplement must be requested from the court. The creditor must provide security, and after the security is provided, the assets, rights, and receivables of the debtor from third parties may be provisionally secured. After this provisional measure, enforcement proceedings should be pursued by the creditor.

Criminal Sanctions for Issuing Checks

In addition to enforcement proceedings for negotiable instruments, the creditor may file a criminal complaint against those who revoke a check, in accordance with Law No. 3167 on Check Payment Procedures and the Protection of Check Holders. The time limit for this criminal case begins from the date of the dishonor and ends within 6 months. Therefore, the claim for punishment of the debtor cannot be made after this time. According to Article 16 of Law No. 3167, the check drawer/account holder or the authorized representative of the drawer is punished. This fine would be the amount of the check. If the drawer is a recidivist, they are sentenced to imprisonment for 1 to 5 years. Furthermore, the Criminal Court may prohibit the drawer or their authorized representatives from holding a check account. This prohibition is also notified to all banks in Türkiye through the Central Bank of the Republic of Turkey.

For more information on this matter and for any other questions, you can consult with our experienced check and promissory note lawyers specializing in such cases