Debt Collection Series-3: Costs of Debt Collection Procedures in Turkey – Financial Services

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Due to the increase in global trade, international debt collection has become a bigger problem these days. Since debt collection procedures vary from country to country, this article explains the costs of initiating enforcement proceedings in Turkey.

As explained in our article titled How can a foreign company/individual recover its debts due in Turkey?, in Turkish law, there are different forms of enforcement proceedings. Yet, in all types, foreigners must pay a security deposit of 20% of the total debt to initiate legal action in Turkey. However, if there is reciprocity between the nation of the debtor and Turkey, the creditor will be exempted from this requirement. The principle of reciprocity can be achieved by international conventions, laws or actions, for examplethe 1961 Hague Convention.

I. If the claim is secured by pledge:

In cases where the debt is secured by pledge, the creditor is required to seize the pledge by contacting the enforcement offices before initiating recovery proceedings.

The creditor can pursue the execution by a judgment [see
II.A. below regarding the costs] or execution without judgment
[see II.B. below regarding the costs] depending on whether the pledge is based on a court decision or not. Therefore, the cost of foreclosure will depend on the enforcement procedure followed, as explained below. In both cases, the other costs resulting from the sale of the pledge will be deducted from the turnover.

II. If the debt is not secured by pledge:

  1. Execution of a court decision / With a judgment:
    • Registration fees [≌ TRY 60 (approx. EUR
      6)]

    • other costs [e.g., notice fee]

    • [If so] Costs related to representation by a lawyer [except the attorney’s fee and cost for
      issuance of power of attorney] including proxy fees [≌ TRY 25 (approx. EUR 3)]


  2. Execution without judgment / Via enforcement offices:
    • Registration fees [≌ TRY 60 (approx. EUR
      6)]

    • other costs [e.g., notice fee]

    • [If so] Costs related to representation by a lawyer [except the attorney’s fee and costs for
      issuance of power of attorney] including proxy fees [≌ TRY 25 (approx. EUR 3)]

    • Advance fee [0,5% of the total amount to be
      collected]
      With regard to debts in foreign currencies, the advance commission will be calculated according to the equivalent in TRY of the debt on the basis of the exchange rate on the date of the opening of the enforcement procedure.

So, for example, the cost of collecting a debt of EUR 100,000.00 in April 2021 will be as follows in each procedure:

  • Execution with judgment: [≌ TRY 100
    (approx. EUR 10)]

  • Execution without judgment: [≌ TRY
    5,100.00 (approx. EUR 510)]

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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