Debt Collection Agency Turkey
Amicable Debt Collections Turkey
1. General information
Cosmopolite Collections maintain a professional collection process, focusing on the relationships between our clients and their debtors at all times. Our team of collection specialists carry out the collection process in-house, contacting debtors both verbally and in writing whilst adhering to federal and state laws.
1.2. Local agents
We use two experienced local debt collection attorneys as a debt collection company on our behalf.
They can also represent us in court if legal action becomes unavoidable. They provide a comprehensive collection service, including double-registered letters, faxes, collection calls, personal visits and debtor credit reports.
1.3. Interest
Contractual interest can usually be claimed. If no interest rate has been agreed contractually, the legal and default interest rate is set as the maximum interest rate applied to foreign exchange accounts set by the Turkish public banks.
As these rates fluctuate daily, our lawyers advise to apply an average rate of 6%; if the claim is in Turkish currency, the interest rate will be significantly higher (approximately 20% per year).
1.4. Debt Collection Costs in Turkey
Collection costs can only be demanded from the debtor if these have been contractually agreed between the creditor and the debtor.
2. Legal Debt Collections Turkey
2.1. General information
The civil courts of first instance cover all civil cases other than those assigned to the peace courts.
The Turkish judicial system is composed of high courts, courts of appeal and the Supreme Court of Appeal, which is the last instance for reviewing judgments rendered by the lower courts.
Even though the Turkish legal system is well organised and efficient, it can still be a slow process as debtors usually appeal and appoint experts to represent them.
2.2. Required documents
In order to proceed with a payment order, a power of attorney is required that must be notarised and legalised by the local Turkish consulate.
It is also possible to have the power of attorney notarised and then have the apostille of The Hague Convention applied. Original or certified copies of all commercial documents, such as copies of invoices, are required.
In the case of a regular lawsuit procedure, copies of the complete contractual documentation should be available, starting with the contract, orders, order confirmations, delivery notes and invoices, as well as exchanges of correspondence.
In the case of verbal negotiations, Cosmopolite Collections require the visit and negotiation reports, together with the names of the witnesses.
2.3. Legal Dunning Procedure Turkey
In order to proceed with a payment order, a power of attorney is required that must be notarised and legalised by the local Turkish consulate.
It is also possible to have the power of attorney notarised and then have the apostille of The Hague Convention applied. Original or certified copies of all commercial documents, such as copies of invoices, are required.
In the case of a regular lawsuit procedure, copies of the complete contractual documentation should be available, starting with the contract, orders, order confirmations, delivery notes and invoices, as well as exchanges of correspondence.
In the case of verbal negotiations, Cosmopolite Collections require the visit and negotiation reports, together with the names of the witnesses.
2.4. Lawsuit in Turkey
In cases where the debtor files an objection, no enforcement will be initiated and the creditor has to apply to the commercial court. It is also possible for the client to apply for a lawsuit directly without applying for the payment order first.
Fines can be imposed to the debtor who has objected in bad faith, provided that the creditor can prove the bad faith. Parties will submit their petitions and replies, and in most cases, the court will send the file to experts.
Parties can then submit their objections to the expert’s report. The court will render its judgment after considering and examining all written petitions relating to the objections and allegations by the parties, which can take a considerable amount of time.
If the court decides that the objection made by the debtor is not justified and the debtor appeals the decision, it is possible to pick up the enforcement.
An appeal does not stop the enforcement unless the debtor submits a bank guarantee for the claim amount to the bailiff’s office.
2.5. Debt Collection Costs
Cosmopolite Collections generally expect a fee of 10%–15% of the claim to be paid to our attorney and a further 4% for court costs and administrative expenses for the collected amount only. If there is no collection, we just pay 5% of the claim amount for court costs, administrative expenses and research. The court costs are determined by the provisions of the Harclar Kanunu, laws nr. 492 (law for Turkish fees).
2.6. Expected time frame
The average duration of a legal dunning process is approximately eight months, whereas a court proceeding can take three to five years depending on the case and circumstances.
2.7. Interest and costs in the legal phase
In case of legal action, the Turkish judge may decide to dismiss any interest claim, depending on the circumstances surrounding the case, any dispute or the debtor’s financial situation.
In all cases, the losing party has to bear the costs of the legal proceedings according to art. 417 I Usul Hukuk Muhakemeleri Kanunu (Turkey Civil Process Law).
In case of partially winning, the costs will be divided between the parties.
3. Insolvency proceedings
3.1. General information
The creditors will be seeking to get all the assets of the debtor liquidated in order to pay off all the debts. If the assets will not be sufficient to meet all the debts, the creditors will be paid a percentage of the monies owed to them on a pro rata basis.
However, as a bankruptcy would mean that the debtor no longer has any control over their company, the strategic implications of bankruptcy are much more important than the practical results.
Unsecured creditors are mainly forced to act as renegade creditors to get their money paid, and therefore bankruptcy is usually engaged in order to make the debtor yield to the threat of bankruptcy, rather than for the sake of the bankruptcy itself.
Bankruptcy action will be started as an individual action by the creditors and will remain as an individual action right up to the moment the court declares the debtor bankrupt.
This enables the initiating creditor to stall or stop the bankruptcy procedure in return for a payment or settlement.
3.2. Proceedings
A bankruptcy order of payment is served to the debtor. Regardless of the debtor’s response to the order of payment, the creditor must take the matter to court, and it has to be the court that decides if bankruptcy will be declared against the debtor.
The court proceedings will be between the creditor (the claimant) and the debtor (the defendant).
However, any other third-party creditors (other creditors) who believe that the outcome of the case will have an effect on them can ask the judge to accept them in the proceedings as parties with limited participation capacity.
The creditor (the claimant) has full control over the case and can decide to continue alone or to abort the case right until the moment the court declares the debtor bankrupt.
Once this happens, the creditor will no longer have sole control over these matters and all creditors will have to decide together. It will be the liquidators who have the power to make decisions from the moment of bankruptcy onwards.
As soon as the debtor is declared bankrupt, all creditors will be informed about the decision and are now able to lodge their claims within a deadline of one month.
In any event, if there is a dispute between the debtor and the creditors, the court must first resolve this dispute completely. A bankruptcy can be declared only after all disputes have been resolved by the court (as an integrated phase of a bankruptcy case).
3.3. Required documents
Copies of the invoices are required, signed by the creditor and authenticated by a notary, who certifies the signature and confirms that the copies are true copies of the original remaining unpaid invoices according to the company’s official books.
The document should bear the apostille of The Hague Convention. However, certified copies of the invoices are not required if the buyer has accepted a bill of exchange or signed a promissory letter duly stamped.
A power of attorney that has been notarised and stamped with the apostille of The Hague Convention is also required.
3.4. Expected time frame and outcome
A bankruptcy claim will typically take about one year from the start of the bankruptcy’s declaration if the debtor does not fight against it.
If the debtor defends, it will take closer to 18 months, with the actual liquidation taking anywhere from a few months to many years.
The shorter the period, the less likely it will be for an ordinary creditor to get any dividends paid. If the estate is complex and rich in assets, it may then take many years for it to be liquidated; but in such a case, the chances of receiving a dividend would be much higher for an ordinary creditor.
Turkey is a country located in Western Asia and Southeastern Europe. Its capital city is Ankara. Turkey is divided into 81 provinces, which are further divided into districts. The government system in Turkey is a presidential representative democratic republic. The official language of Turkey is Turkish, and the currency is the Turkish lira.
The process of collecting business debts in Turkey can be challenging for foreign businesses due to a number of factors. One of the main challenges is that the legal system in Turkey can be complex and time-consuming. It is also important to note that the laws and regulations governing debt collection in Turkey can vary from region to region, and local laws may apply in certain cases.
There are a number of debt collection agencies operating in Turkey, and the industry has existed in the country for several years. These agencies offer a range of services to creditors looking to recover outstanding debts from businesses or individuals in Turkey.
Here are five benefits of using a commercial debt collection agency for Turkey:
- Expertise: A debt collection agency in Turkey will have extensive knowledge of the local laws and regulations governing debt collection, as well as experience in working with foreign businesses to recover debts in the country.
- Time-saving: Engaging a debt collection agency can save you time and effort, as they will handle the entire debt recovery process on your behalf.
- Improved chances of success: A debt collection agency can increase your chances of recovering the debt, as they have the resources and expertise to pursue legal action if necessary.
- Professional approach: A debt collection agency will adopt a professional and respectful approach when dealing with debtors, which can help to preserve relationships and avoid damaging your reputation.
- Cost-effective: Using a debt collection agency can be more cost-effective than trying to recover the debt yourself, especially if the legal process is required.
Our debt recovery agency has a very high success rate in Turkey thanks to our multi-lingual debt collectors located in the country and our 24/7 online debt recovery report website.
We have a deep understanding of the local laws and regulations governing debt collection in Turkey, and our team is well-equipped to handle the challenges of collecting debts in the country.
