Debt Collection in Turkey for Foreign Creditors: Enforcement Proceedings, Asset Freezing and Insolvency Risks

Introduction

A foreign company may have a valid invoice, signed contract or final foreign judgment against a Turkish debtor but still experience serious difficulties collecting the debt.

Obtaining a favourable judgment and actually receiving payment are different stages.

Successful debt recovery normally depends on:

• Correct identification of the debtor,
• Quality of the contractual evidence,
• Location of the debtor’s assets,
• Choice between enforcement, litigation and arbitration,
• Speed of legal action,
• Availability of interim protection,
• Whether the debtor has entered concordat, restructuring or bankruptcy,
• Whether the foreign creditor must provide security,
• Whether a foreign judgment or arbitral award must first be recognised or enforced.

Turkey’s enforcement system allows creditors to begin certain monetary enforcement proceedings without first obtaining a court judgment.

This can be useful where the debt is based on:

• Commercial invoice,
• Supply agreement,
• Consultancy agreement,
• Loan,
• Account statement,
• Acknowledgement of debt,
• Unpaid purchase price.

However, the debtor may object to an ordinary payment order. A timely objection normally stops the proceeding and forces the creditor to continue through mediation, litigation or an enforcement-court procedure.

For this reason, foreign creditors should not begin enforcement without first analysing what will happen if the debtor objects.

The creditor should also investigate the debtor’s assets before investing substantial time and cost in a legal claim. A legally valid debt may have little practical value if the debtor has no attachable assets or has already transferred them to other persons.

Can a Foreign Creditor Start Enforcement Proceedings in Turkey?

Yes.

Foreign individuals and foreign companies may initiate enforcement proceedings against debtors and assets located in Turkey.

The creditor does not generally need to establish a Turkish company merely to collect a Turkish debt.

The foreign creditor will commonly need:

• Valid identity or corporate documents,
• Turkish tax identification number where required,
• Turkish lawyer’s power of attorney,
• Apostille or consular legalisation,
• Sworn Turkish translations,
• Contract and supporting evidence,
• Debtor’s correct legal name and address.

The power of attorney may be executed:

• Before a Turkish notary,
• Before a Turkish consulate abroad,
• Before a foreign notary followed by apostille or consular legalisation and Turkish translation.

The authority should expressly cover matters such as:

• Enforcement proceedings,
• Lawsuits,
• Mediation,
• Settlement,
• Receipt of payments,
• Precautionary attachment,
• Recognition and enforcement.

Must a Foreign Creditor Provide Security?

A foreign individual or legal entity that files a lawsuit, intervenes in a Turkish case or starts an enforcement proceeding may be required to provide security for procedural costs and possible losses suffered by the opposing party.

The court or enforcement authority may exempt the foreign creditor where reciprocity exists between Turkey and the creditor’s country, either through an international treaty or reciprocal legal practice.

The security requirement should therefore be checked according to:

• Creditor’s nationality,
• Country of incorporation,
• Applicable bilateral treaty,
• Reciprocal court practice,
• Nature of the proceeding.

A foreign shareholder should not assume that using a Turkish subsidiary automatically allows the subsidiary to collect a debt belonging legally to the foreign parent company.

The claimant must be the person or company that actually owns the receivable, unless the debt has been validly assigned.

Identify the Correct Debtor

One of the most common collection mistakes is proceeding against the wrong legal entity.

A commercial group may contain several companies with similar names. The company that negotiated the transaction may be different from the company that:

• Signed the contract,
• Issued the purchase order,
• Received the goods,
• Received the invoice,
• Guaranteed payment,
• Owns the visible assets.

Before filing, the creditor should obtain:

• Full registered name,
• Company type,
• MERSİS number,
• Tax number,
• Trade registry number,
• Registered address,
• Current directors and managers,
• Branch information.

A brand name, factory sign or website name is not necessarily the legal debtor.

Starting proceedings against the wrong company can result in:

• Rejection of the claim,
• Liability for legal costs,
• Loss of time,
• Expiry of limitation periods.

Shareholders Are Not Automatically Liable

A Turkish company is generally a separate legal person.

Its shareholders, parent company, directors and affiliated companies do not automatically become responsible for every commercial debt.

Personal or group-company liability may arise where there is a separate legal basis, such as:

• Personal guarantee,
• Parent company guarantee,
• Joint signature on the contract,
• Assumption of debt,
• Tortious conduct,
• Fraud,
• Abuse of legal personality,
• Specific statutory responsibility.

The fact that one person owns all the shares does not, by itself, make that person liable for the company’s ordinary supplier debts.

The creditor should therefore obtain guarantees before extending substantial unsecured credit.

Main Debt Collection Options

A foreign creditor may consider:

1. Informal demand and negotiation,
2. Notarial or formal payment notice,
3. Ordinary enforcement without judgment,
4. Enforcement based on a judgment,
5. Negotiable instrument enforcement,
6. Lawsuit for payment,
7. Arbitration,
8. Precautionary attachment,
9. Recognition and enforcement of a foreign judgment,
10. Enforcement of a foreign arbitral award,
11. Participation in concordat or bankruptcy.

The best route depends on:

• Type of evidence,
• Contractual dispute clause,
• Maturity of the debt,
• Debtor’s likely objections,
• Location of assets,
• Urgency,
• Cost.

Formal Demand Before Enforcement

A formal payment demand is not always legally required before ordinary enforcement, particularly where the contract contains a clear payment date.

Nevertheless, a written demand can be useful to:

• Put the debtor into default,
• Establish the interest starting date,
• Confirm the amount claimed,
• Give a contractual cure period,
• Preserve termination rights,
• Obtain an acknowledgement,
• Demonstrate good faith.

The demand should identify:

• Contract,
• Invoices,
• Principal debt,
• Payment date,
• Interest,
• Bank details,
• Final deadline,
• Intended legal action.

The notice may be sent through:

• Turkish notary,
• Registered electronic mail,
• Contractually agreed method,
• International service procedure.

Ordinary e-mail or WhatsApp correspondence may support the claim but can create proof disputes concerning receipt, authority and content.

Ordinary Enforcement Without a Judgment

For many due monetary debts, the creditor may initiate ordinary attachment proceedings without first obtaining a court judgment.

The enforcement application identifies:

• Creditor,
• Debtor,
• Principal amount,
• Accrued interest,
• Future interest,
• Legal basis of the claim,
• Currency.

The enforcement office then issues a payment order.

The proceeding is not a final judicial determination that the debt exists. It is a procedural collection mechanism that allows the debtor to object.

Debtor’s Seven-Day Objection Period

In ordinary enforcement, the debtor may generally object within seven days after service of the payment order.

The objection may concern:

• Existence of the debt,
• Amount,
• Interest,
• Signature,
• Jurisdiction of the enforcement office,
• Payment,
• Set-off,
• Limitation.

A timely objection normally stops the ordinary enforcement proceeding. Turkish enforcement legislation expressly provides the seven-day objection mechanism.

The debtor does not ordinarily need to prove every defence at the initial objection stage.

This is why a creditor should prepare for the objection before filing the enforcement request.

What Happens If the Debtor Does Not Object?

If the debtor does not object within the applicable period and no other procedural obstacle exists, the enforcement proceeding becomes final.

The creditor may then request attachment of the debtor’s assets.

Potential targets include:

• Bank accounts,
• Receivables from customers,
• Real estate,
• Vehicles,
• Company shares,
• Movable property,
• Rental income,
• Other financial rights.

The creditor must still request and complete attachment and sale procedures within the statutory periods.

A finalised proceeding does not automatically transfer money to the creditor.

What Happens If the Debtor Objects?

The creditor must choose the appropriate continuation procedure.

Depending on the documents and claim, the creditor may file:

• Action for annulment of objection,
• Application for removal of objection,
• Ordinary action for payment.

The correct route depends on whether the creditor holds documents qualifying under the special enforcement provisions.

Action for Annulment of Objection

The creditor may file an action for annulment of objection within one year after notification of the debtor’s objection.

The creditor must prove the debt according to the ordinary evidentiary rules. The Turkish enforcement statute regulates this one-year period for an annulment action.

If the court accepts the claim:

• The debtor’s objection is cancelled,
• The enforcement proceeding continues,
• Enforcement denial compensation may be awarded where the statutory conditions are satisfied.

The one-year period is linked specifically to the annulment action.

Failure to use this procedure within one year does not necessarily eliminate the underlying debt immediately. The creditor may still have an ordinary payment action within the substantive limitation period, but the legal and procedural consequences will differ.

Removal of Objection

Where the creditor holds one of the specific documents recognised by the Enforcement and Bankruptcy Law, the creditor may seek removal of the objection before the enforcement court.

Qualifying documents may include, depending on their form:

• Acknowledged signature document,
• Notarised acknowledgement,
• Certain official documents,
• Documents recognised under Article 68 and related provisions.

This procedure can be faster than a full commercial lawsuit but has a narrower documentary scope.

An ordinary unsigned invoice will not automatically qualify.

Mandatory Commercial Mediation

Commercial lawsuits seeking payment or compensation are generally subject to mandatory mediation before filing.

The mediation requirement also applies expressly to qualifying commercial:

• Annulment of objection actions,
• Negative declaratory actions,
• Restitution actions.

The clarification was introduced to remove uncertainty concerning litigation connected to enforcement proceedings.

The creditor may ordinarily start an enforcement proceeding without first applying to mediation.

However, if the debtor objects and the creditor later files a qualifying commercial lawsuit, mediation must be completed before the case is filed.

Failure to complete mandatory mediation can lead to procedural dismissal.

Foreign Participation in Mediation

A foreign creditor does not necessarily need to travel to Turkey for every mediation meeting.

The creditor may participate through a Turkish lawyer holding special authority for:

• Mediation,
• Settlement,
• Release,
• Receipt of money.

The foreign company should ensure that the person instructing the lawyer has authority under the company’s internal rules.

A commercial settlement should address:

• Principal debt,
• Interest,
• Currency,
• Instalments,
• Security,
• Default consequences,
• Existing enforcement file,
• Costs,
• Release.

Where the legal requirements are satisfied, a mediation settlement may have enforceable-document status.

Enforcement Based on a Turkish Judgment

A final or enforceable Turkish court judgment may be enforced through judgment-based enforcement.

The debtor cannot ordinarily stop this enforcement merely by objecting to the substance of the debt in the same manner as ordinary enforcement.

However, the debtor may raise limited enforcement objections or seek suspension during an appeal under the applicable procedure.

The creditor should obtain:

• Certified judgment,
• Finality or enforceability annotation where required,
• Calculation of interest and costs,
• Debtor’s current address and asset information.

Foreign Court Judgments

A foreign court judgment cannot generally be sent directly to a Turkish enforcement office for attachment.

The foreign creditor must first obtain a Turkish recognition or enforcement decision under the International Private and Procedural Law.

For monetary judgments, enforcement is normally required.

The Turkish court principally examines matters such as:

• Judgment being final under the law of the issuing country,
• Reciprocity,
• Jurisdictional conditions,
• Proper service,
• Opportunity to defend,
• Turkish public policy.

The Turkish court does not ordinarily retry the full contractual dispute.

Required documents generally include:

• Certified foreign judgment,
• Finality certificate,
• Apostille or legalisation,
• Certified Turkish translations,
• Proof of service where relevant.

After enforcement is granted, the foreign judgment can be executed like a Turkish judgment. The statutory framework governing security, recognition and enforcement is contained in Law No. 5718.

Foreign Arbitral Awards

A foreign arbitral award also requires an enforcement procedure before compulsory execution against Turkish assets.

The applicant generally submits:

• Arbitration agreement,
• Arbitral award,
• Evidence that the award is binding or enforceable,
• Apostille or legalisation where required,
• Turkish translations.

Enforcement may be refused on limited grounds such as:

• Invalid arbitration agreement,
• Lack of notice,
• Inability to present the defence,
• Tribunal exceeding its authority,
• Procedural defect,
• Non-arbitrability,
• Public policy,
• Award being set aside or not binding.

An award is not normally reviewed again on the merits merely because the Turkish court would have reached a different commercial conclusion.

Negotiable Instrument Enforcement

A creditor holding a valid:

• Cheque,
• Promissory note,
• Bill of exchange

may use a special enforcement procedure applicable to negotiable instruments.

This route may be faster and place a heavier procedural burden on the debtor.

However, negotiable instruments are subject to strict rules concerning:

• Form,
• Signature,
• Maturity,
• Presentation,
• Endorsement,
• Limitation,
• Authority.

A document described commercially as a “security cheque” or “guarantee note” may still produce negotiable instrument consequences.

The original instrument should be preserved carefully.

Foreign-Currency Debts

A debt may be denominated in:

• Euro,
• US dollar,
• British pound,
• Another foreign currency.

The enforcement request should state the foreign currency, applicable interest and required Turkish lira equivalent according to the procedural rules.

The creditor should review:

• Contractual payment currency,
• Whether payment in kind can be demanded,
• Relevant exchange-rate date,
• Interest applicable to the currency,
• Turkish foreign-exchange restrictions.

Claiming an incorrect exchange rate or interest type may increase the debtor’s objections.

Asset Investigation Before Filing

A creditor should assess the debtor’s collection capacity before beginning expensive proceedings.

The investigation may include:

• Trade registry,
• Registered capital,
• Directors and shareholders,
• Real estate,
• Vehicles,
• Bank relationships,
• Receivables from customers,
• Enforcement files,
• Mortgages and attachments,
• Concordat announcements,
• Bankruptcy status,
• Insolvency or restructuring.

The value of registered capital does not necessarily show the company’s current financial strength.

A company with high registered capital may have:

• No cash,
• Pledged assets,
• Heavy tax debt,
• Multiple attachments,
• Uncollectible receivables.

Attachment of Bank Accounts

After an enforcement proceeding becomes final, the creditor may request attachment of the debtor’s bank accounts.

An electronic attachment request may reach banks through the Turkish enforcement system.

The practical result depends on:

• Whether the debtor has an account at the bank,
• Account balance,
• Earlier attachments,
• Pledge or set-off rights,
• Protected funds,
• Whether the account belongs to the actual debtor.

A bank account attachment only reaches funds legally belonging to the named debtor.

The creditor cannot attach a shareholder’s personal account for the company’s debt without a separate basis for liability.

Attachment of Third-Party Receivables

The debtor may have receivables from:

• Customers,
• Tenants,
• Contractors,
• Insurance companies,
• Business partners,
• Other group companies.

The creditor may use third-party garnishment notices under the Enforcement and Bankruptcy Law.

The third party must respond within the statutory framework and may object that:

• No debt is owed,
• The receivable is not yet due,
• Payment has already been made,
• The property does not belong to the debtor.

Failure to respond correctly may create serious liability for the third party.

Third-party receivable attachment is especially useful where a debtor has limited physical assets but continues to trade.

Attachment of Real Estate

The creditor may request attachment of real estate registered in the debtor’s name.

The property should be examined for:

• Existing mortgages,
• Earlier attachments,
• Tax liens,
• Court restrictions,
• Approximate market value,
• Ownership share,
• Tenancy,
• Sale prospects.

Being the first creditor to discover a property does not guarantee payment.

Distribution of sale proceeds depends on:

• Ranking,
• Secured claims,
• Earlier attachments,
• Public debts,
• Sale expenses.

A property with a large bank mortgage may produce no meaningful distribution to an unsecured creditor.

Attachment of Vehicles and Movable Property

Registered vehicles may be attached through the relevant electronic systems.

The creditor should assess:

• Market value,
• Existing finance or pledge,
• Physical location,
• Earlier attachments,
• Sale cost.

Movable assets located at the debtor’s workplace may also be attached, subject to exemptions and third-party ownership claims.

The law prohibits attachment clearly exceeding the amount reasonably necessary to cover the debt and costs. Current enforcement legislation also includes special protection and judicial approval requirements for attachment inside residential premises.

Attachment of Company Shares

The creditor may request attachment of a debtor’s shares in a limited or joint stock company.

However, attaching shares is not the same as directly attaching the company’s bank accounts or assets.

The shareholder owns the shares; the company owns its property.

The practical value of a share attachment depends on:

• Company’s real financial condition,
• Share-transfer restrictions,
• Other shareholders,
• Existing pledges,
• Marketability,
• Dividend rights.

Closely held company shares can be difficult to sell.

What Is Precautionary Attachment?

Precautionary attachment, known as ihtiyati haciz, is a temporary protective measure for monetary claims.

Its purpose is to preserve assets before the creditor obtains a final judgment or finalised enforcement proceeding.

It is not a general criminal-style freezing order and does not automatically freeze every asset owned by the debtor.

For a due monetary claim not secured by pledge, the creditor may seek precautionary attachment by showing the claim and legal conditions.

For a debt not yet due, the measure may be available in exceptional cases, including where:

• Debtor has no fixed residence in Turkey,
• Debtor is preparing to conceal assets, flee or act fraudulently to avoid obligations.

The statutory precautionary attachment framework is regulated in the Enforcement and Bankruptcy Law.

Evidence Needed for Precautionary Attachment

The creditor should present credible evidence such as:

• Signed contract,
• Acknowledgement of debt,
• Invoices,
• Delivery documents,
• Bank records,
• Default notice,
• Debtor’s written admission,
• Evidence of asset transfers,
• Evidence of closure or flight risk.

The court conducts a preliminary assessment rather than a complete trial.

A disputed and poorly documented invoice claim may not provide sufficient basis.

The creditor should also explain:

• Maturity,
• Amount,
• Why immediate protection is necessary,
• Assets to be targeted where known.

Security for Precautionary Attachment

The court normally requires the creditor to provide security against possible damage caused by an unjustified precautionary attachment.

The amount and form are determined according to the circumstances.

Security may take the form of:

• Cash deposit,
• Bank guarantee,
• Another accepted guarantee.

Foreign creditors may therefore face both:

• Foreign-party procedural security,
• Precautionary attachment security.

These are legally distinct requirements.

Strict Deadlines After a Precautionary Attachment Order

A precautionary attachment order must be implemented within the statutory period. Otherwise, the order loses effect.

After implementation, a creditor who obtained the measure before filing the main proceeding must start the appropriate enforcement or lawsuit process within the required period.

The Enforcement and Bankruptcy Law expressly provides that the precautionary attachment falls automatically if the creditor does not complete the necessary follow-up steps.

A foreign creditor should therefore prepare:

• Main enforcement request,
• Mediation strategy,
• Lawsuit documents,
• Translations,
• Security

before applying for the interim order.

Objection to Precautionary Attachment

The debtor may challenge the order on grounds such as:

• Court’s lack of jurisdiction,
• Absence of statutory conditions,
• Insufficient evidence,
• Incorrect amount,
• Inadequate security.

A third party whose property has been attached may also use the available ownership and objection procedures.

The creditor should not request attachment of assets clearly belonging to unrelated persons merely because they are connected with the debtor.

Fraudulent Transfers Before Enforcement

A debtor anticipating enforcement may transfer assets to:

• Relative,
• Shareholder,
• Affiliated company,
• Friend,
• Nominee.

The creditor may consider an action for cancellation of disposition, known as a tasarrufun iptali davası.

This action does not normally cancel the transfer for every legal purpose.

Its objective is to allow the creditor to treat the transferred asset as available for execution against the relevant parties.

The claim may concern:

• Gratuitous transfer,
• Sham sale,
• Transfer to close relative,
• Transaction made while insolvent,
• Transaction intended to harm creditors.

Conditions for a Fraudulent Disposition Action

The creditor will generally need to establish matters such as:

• Valid receivable,
• Enforcement proceeding,
• Inability to collect from the debtor,
• Qualifying transaction,
• Applicable statutory period.

A certificate showing insufficiency of assets may be important.

The statutory action is subject to a five-year ultimate period from the date of the challenged disposition.

The creditor should not delay after discovering suspicious transfers.

Evidence may include:

• Historic title deed records,
• Trade registry changes,
• Bank transfers,
• Relationship between parties,
• Sale value,
• Timing,
• Debtor’s financial status.

Do Not Confuse Fraudulent Disposition With Title Cancellation

A fraudulent disposition action and an ordinary title deed cancellation action are different.

In the enforcement-based action:

• The property may remain formally registered to the third party,
• The creditor obtains authority to execute against it for the specific debt.

A title deed cancellation action seeks a change in legal ownership and requires a different substantive basis.

Choosing the wrong claim can cause procedural delay and dismissal.

What Is Concordat?

Concordat is a court-supervised restructuring procedure intended to allow a debtor to reorganise debts under a proposed payment plan.

A debtor may request:

• Temporary moratorium,
• Definitive moratorium,
• Approval of a concordat project.

During the temporary and definitive moratorium, important restrictions apply to creditor enforcement.

Under Article 294 of the Enforcement and Bankruptcy Law, new enforcement proceedings generally cannot be initiated and existing proceedings stop during the moratorium, including proceedings for public debts, subject to statutory exceptions. Limitation and forfeiture periods that can be preserved through enforcement also stop running.

Effect of Concordat on Existing Enforcement

A foreign creditor discovering that the debtor has obtained a concordat moratorium should immediately determine:

• Date of the moratorium,
• Court and file number,
• Commissioner,
• Claim filing deadline,
• Classification of the debt,
• Security held,
• Voting rights,
• Proposed payment terms.

The creditor should not continue ordinary attachment measures as though no moratorium existed.

Failure to file the receivable properly may affect participation, voting and distributions.

Secured Creditors During Concordat

Creditors holding a valid pledge or mortgage have a different position from ordinary unsecured creditors.

Proceedings involving secured claims may be subject to special rules. Enforcement may be initiated or continued in limited form, while protective measures and sale of pledged assets may be restricted during the moratorium.

The exact rights depend on:

• Type of security,
• Scope of secured debt,
• Existing proceeding,
• Court orders,
• Concordat project.

A creditor should not assume that a contractual “security” is legally perfected.

An unregistered or defective pledge may leave the creditor in the unsecured class.

Privileged Claims

Certain claims receive statutory priority in enforcement and bankruptcy.

Examples may include qualifying:

• Employee claims,
• Family support claims,
• Claims protected under Article 206.

Some privileged claims are treated differently during concordat.

A foreign commercial creditor holding an ordinary invoice claim will generally be unsecured unless it has valid collateral.

Voting and Approval of Concordat

A creditor’s influence depends on:

• Accepted claim amount,
• Disputed portion,
• Security,
• Classification,
• Statutory voting rules.

The creditor should review the proposal economically, not only legally.

Questions include:

• Percentage offered,
• Payment dates,
• Currency treatment,
• Interest,
• Guarantees,
• Debtor’s projected cash flow,
• Asset sales,
• Related-party claims.

Approval of an unrealistic project may only delay eventual insolvency.

Bankruptcy

If a debtor company is declared bankrupt, individual enforcement is replaced by collective bankruptcy administration.

Creditors must generally file their claims with the bankruptcy estate.

The bankruptcy administration identifies:

• Estate assets,
• Accepted claims,
• Secured claims,
• Priority ranking,
• Distribution.

A creditor that already started enforcement does not necessarily remain outside bankruptcy.

The creditor should submit:

• Contract,
• Invoice,
• Delivery evidence,
• Interest calculation,
• Security documents,
• Judgment or award,
• Translations.

Ranking in Bankruptcy

Bankruptcy proceeds are distributed according to statutory ranking.

Secured creditors generally look first to the value of their collateral, subject to expenses and statutory rules.

Unsecured creditors participate according to the applicable ranking after privileged claims.

A simple retention statement in an invoice may not create an effective proprietary right against the bankruptcy estate.

The security must be legally valid and perfected under the applicable law.

Insolvency Warning Signs

Foreign creditors should monitor warning signs such as:

• Repeated requests for extensions,
• Returned cheques,
• Change of registered address,
• Rapid manager changes,
• Sale of core assets,
• Employee departures,
• Tax or SGK attachments,
• Multiple enforcement proceedings,
• Closure of operations,
• Concordat rumours or announcements,
• Payments requested through affiliated companies.

The creditor should not continue supplying substantial goods merely because the debtor promises that an investor will arrive soon.

Possible protective responses include:

• Advance payment,
• Bank guarantee,
• Parent guarantee,
• Mortgage,
• Pledge,
• Reduced credit limit,
• Suspension of delivery,
• Retention of title where valid,
• Immediate legal action.

Parent Company and Affiliate Payments

A Turkish debtor may request that payment be sent to or received from another group company.

The creditor should clarify:

• Who owes the debt,
• Whether the payment is on behalf of the debtor,
• Whether the affiliate assumes liability,
• Whether an assignment exists,
• Whether the payment creates tax or set-off issues.

A payment arrangement involving an affiliate does not automatically make the affiliate jointly liable for the remaining debt.

Any guarantee or debt assumption should be written and signed by an authorised representative.

Settlement by Instalments

An instalment settlement should not merely state that the debtor will pay monthly.

It should regulate:

• Total debt,
• Currency,
• Interest,
• Instalment dates,
• Security,
• Acceleration,
• Default,
• Existing enforcement file,
• Legal costs,
• Release after full payment.

The creditor should avoid closing the enforcement file or releasing all attachments immediately after receiving only the first instalment.

Security may remain until full payment.

Assignment of the Receivable

A foreign creditor may assign the receivable to:

• Collection company,
• Affiliate,
• Investor,
• Factoring institution.

The assignment should comply with:

• Governing law,
• Contractual restrictions,
• Notice requirements,
• Turkish enforcement procedure,
• Tax and currency rules.

The debtor may raise against the assignee certain defences that existed against the original creditor.

An assignment does not automatically improve the collectability of a weak or disputed debt.

Limitation Periods

The limitation period depends on:

• Governing law,
• Contract type,
• Maturity,
• Invoice,
• Acknowledgement,
• Negotiable instrument,
• Transport,
• Insurance,
• Agency.

Special claims may be subject to shorter periods than ordinary contract claims.

Starting a legally valid enforcement proceeding may interrupt limitation, but defective or misdirected action may not provide the expected protection.

Settlement negotiations do not always suspend limitation.

The creditor should calculate the deadline before waiting for another promised payment.

Interest Calculation

The creditor should identify:

• Contractual interest,
• Commercial default interest,
• Foreign-currency interest,
• Starting date,
• Payments and deductions,
• Compound interest restrictions.

An excessive or incorrectly calculated interest claim can increase objections and costs.

The enforcement request should distinguish:

• Principal,
• Accrued interest,
• Future interest,
• Costs,
• Tax where legally applicable.

Common Mistakes by Foreign Creditors

Common mistakes include:

• Proceeding against the wrong group company,
• Relying only on an invoice,
• Waiting until the debtor transfers assets,
• Ignoring contractual arbitration,
• Filing a lawsuit before mandatory mediation,
• Failing to provide foreign-party security,
• Seeking precautionary attachment without preparing the main action,
• Missing the one-year annulment of objection period,
• Assuming company shareholders are liable,
• Accepting an unsecured instalment plan,
• Releasing attachments after partial payment,
• Failing to register a mortgage or pledge,
• Ignoring concordat announcements,
• Missing bankruptcy claim deadlines,
• Using incomplete foreign documents,
• Claiming the wrong currency or interest.

Practical Collection Strategy

Step 1: Verify the debtor

Confirm the legal entity, address, directors and trade registry status.

Step 2: Review the contract

Identify governing law, jurisdiction, arbitration, payment and notice clauses.

Step 3: Analyse the evidence

Collect contracts, invoices, delivery records, correspondence and admissions.

Step 4: Calculate the debt

Separate principal, interest, expenses and currency conversion.

Step 5: Investigate assets

Check real estate, vehicles, business activity, attachments, concordat and bankruptcy.

Step 6: Send a formal demand

Create a clear final payment record.

Step 7: Consider interim protection

Apply for precautionary attachment where the legal and evidentiary conditions exist.

Step 8: Select the main proceeding

Choose enforcement, litigation, arbitration or foreign judgment enforcement.

Step 9: Prepare for debtor objection

Do not assume the enforcement proceeding will remain uncontested.

Step 10: Complete mediation

Use mandatory mediation before a qualifying commercial lawsuit.

Step 11: Preserve deadlines

Monitor objection, annulment, attachment, limitation and insolvency periods.

Step 12: Maintain enforcement pressure

Request bank, real estate, vehicle, share and third-party receivable attachments where appropriate.

Frequently Asked Questions

Can a foreign company start enforcement in Turkey?

Yes. Foreign companies may initiate Turkish enforcement proceedings and lawsuits, subject to identity, representation, document and possible security requirements.

Is a Turkish company required?

No. The foreign creditor may collect its own receivable without establishing a Turkish subsidiary.

Is a court judgment required before enforcement?

Not for ordinary monetary enforcement. A creditor may initiate a proceeding without a prior judgment, but the debtor may object.

How long does the debtor have to object?

The ordinary objection period is generally seven days after service of the payment order.

What happens after an objection?

The proceeding normally stops. The creditor may seek annulment or removal of the objection or file an ordinary payment action.

How long is allowed for an annulment of objection action?

The action must generally be filed within one year after notification of the objection.

Is mediation required?

Mandatory mediation is generally required before qualifying commercial payment, compensation, annulment of objection, negative declaratory and restitution lawsuits.

Is mediation required before starting ordinary enforcement?

Ordinary enforcement may generally be initiated without prior mediation. A later qualifying lawsuit may require mediation.

Can the creditor freeze bank accounts before judgment?

The creditor may request precautionary attachment where the statutory conditions and evidence exist. It is not automatic.

Is precautionary attachment available for every disputed invoice?

No. The creditor must present sufficient preliminary evidence of the monetary claim and applicable conditions.

Must the creditor provide security?

The court normally requires security for precautionary attachment. A foreign creditor may also face a separate foreign-party security requirement.

Can a foreign creditor be exempt from security?

Yes, where reciprocity or an applicable treaty provides an exemption.

Which debtor assets can be attached?

Potential assets include bank accounts, customer receivables, real estate, vehicles, shares and movable property.

Can the shareholder’s assets be attached for company debt?

Not automatically. A separate personal liability basis is required.

Can a parent company’s assets be attached?

Not merely because it owns the Turkish debtor. A guarantee or another legal basis is normally necessary.

Can customer payments owed to the debtor be attached?

Yes. Third-party garnishment procedures may be used against receivables owed to the debtor.

Does an attachment guarantee collection?

No. Earlier creditors, secured claims, public debts, asset value and sale costs may reduce or eliminate recovery.

Can the debtor’s home be entered for attachment?

Residential attachment is subject to special judicial approval requirements and statutory protections.

Can a foreign judgment be executed directly?

No. A Turkish enforcement judgment is ordinarily required before compulsory execution.

Can a foreign arbitral award be enforced?

Yes, after the applicable Turkish enforcement procedure and subject to limited refusal grounds.

What happens if the debtor transfers property to a relative?

A fraudulent disposition action may be available where the statutory requirements are satisfied.

Does that action return the property to the debtor?

Not necessarily. It generally permits the creditor to execute against the transferred asset for the relevant debt.

What happens during concordat?

New enforcement proceedings generally cannot begin and existing proceedings stop during the moratorium, subject to statutory exceptions.

Can secured creditors continue enforcement during concordat?

Special rules apply. Proceedings may continue in limited form, while attachment measures and sale may be restricted.

What should the creditor do after a concordat announcement?

Identify the court, commissioner, filing deadline, claim amount, security status and proposed payment plan immediately.

What happens if the debtor becomes bankrupt?

The creditor generally files the claim with the bankruptcy estate and participates in the statutory ranking and distribution system.

Is an invoice enough to prove the debt?

Not always. Delivery, performance, acceptance and non-payment evidence should also be preserved.

Can the parties settle in instalments?

Yes. The agreement should include acceleration, security, enforcement and release provisions.

Should attachments be removed after the first instalment?

Usually not without replacement security. Release terms should be linked to full payment or a carefully structured guarantee.

Conclusion

Foreign creditors may use Turkey’s court and enforcement system to collect debts from Turkish companies and individuals.

A monetary enforcement proceeding can generally be started without first obtaining a judgment. The debtor may, however, object within seven days, causing ordinary enforcement to stop.

The creditor must then select the appropriate continuation route, including:

• Annulment of objection,
• Removal of objection,
• Ordinary payment lawsuit.

An annulment of objection action must generally be filed within one year after notification of the objection.

Commercial payment and compensation lawsuits, including qualifying annulment, negative declaratory and restitution cases, are generally subject to mandatory mediation.

Speed is particularly important where the debtor may transfer assets.

Precautionary attachment can protect a monetary claim before final judgment, but the creditor must present sufficient preliminary evidence, provide security and comply with strict follow-up deadlines.

Potential enforcement targets include:

• Bank accounts,
• Customer receivables,
• Real estate,
• Vehicles,
• Company shares,
• Movable property.

Attachment does not guarantee collection. Existing mortgages, earlier attachments, public debts and insolvency proceedings may reduce recovery.

A foreign court judgment or arbitral award cannot ordinarily be executed directly against Turkish assets. The creditor must first complete the applicable recognition or enforcement procedure.

Foreign creditors may also be required to provide procedural security, although treaty or reciprocity exemptions may apply.

Concordat creates a major collection risk. During a temporary or definitive moratorium, new enforcement proceedings generally cannot be initiated and existing proceedings stop, subject to statutory exceptions. The creditor must file the claim and monitor the restructuring process.

If the debtor enters bankruptcy, the creditor must participate in the collective bankruptcy estate and statutory ranking.

The most effective debt collection strategy therefore begins before the debt becomes overdue. Foreign creditors should obtain:

• Signed contract,
• Clear dispute clause,
• Delivery evidence,
• Bank guarantee or other security,
• Accurate debtor information,
• Ongoing financial monitoring.

Once payment is missed, the creditor should act quickly, preserve evidence, investigate assets and coordinate enforcement, interim protection, mediation and litigation without allowing limitation or insolvency deadlines to expire.