1.1 Amicable Phase

1.1.1 General

Accounts Receivable Turkey is committed to providing a professional collection experience to our clients and the debtors we pursue. We carry out an amicable collection process by focusing on the needs of our client, as well as on the needs of the debtor, and we seek to maintain an open relationship between both parties for the duration of the collection process. Each debt we handle is collected by a professional, in-house team of collectors who have a wealth of experience reaching amicable payments, settlements, and other arrangements. Contact with debtors during the amicable phase of collection will be made via telephone contact and written correspondence to the debtor’s main business address or home address.

In the event of a dispute lodged against the debt, our professional team of collectors will examine contractual documents, like the initial contract, the terms and conditions of the relationship, invoices, account statement, and others, to reach amicable conclusion with the debtor that avoids the legal system. If legal actions do need to be pursued, or if we must conduct additional research into the debtor’s business or finances, we will first consult with our legal team. It is the policy of Accounts Receivable Turkey to follow all state and federal laws governing the fair collection of debts from private individuals and corporate entities.

1.1.2 Local Agent

Accounts Receivable Turkey does employ collection agents who can visit debtors at their primary place of business, or at their home address. Unlike many companies, our field agents are actually lawyers who can also represent our company and our clients in court if a debtor raises a dispute against either the debt or their creditor. The goal of our local field agents is to determine key information about the debtor’s business, including the value of their current assets, their overall financial health, and the debtor’s ability to repay the debt owed to the creditor in a timely fashion.

Any new information learned from a field visit to a debtor will be neatly summarized and forwarded to our offices for review. Our in-house agents will review this information and share it with clients, working together with our clients to determine an appropriate course of action.

Our field agents are also able to provide a fully comprehensive collection service on our behalf, corresponding with debtors and collect payments toward a debt when possible. Overall, this service greatly enhances Accounts Receivable Turkey’s effectiveness in many cases.

1.1.3 Interest

Interest can generally be attached to a past due balance owed by the debtor. This interest rate comes from one of two sources. The first is the contract that exists between the debtor and the creditor as part of their business agreement. Accounts Receivable Turkey will enforce any contract between the parties first and foremost. If there is no interest rate stipulated in this contract, then our professionals will move to enforce a different interest rate during the amicable collection process.

When no specific interest rate is defined in a contractual agreement, Accounts Receivable Turkey will apply the interest rate set to foreign exchange accounts by the Turkish public banks. These rates fluctuate daily, however, so our lawyers and collection staff are encouraged to apply the average rate of 6 percent to the claim. If the claim is in Turkish currency, the interest rate charged to debtors will be significantly higher. For those claims, Accounts Receivable Turkey charges an interest rate of 20 percent per annum.

1.1.4 Debt collection costs

Collection costs cannot be charged to the debtor in the vast majority of the cases in Turkey. This is because such costs can only be collected when they’re stipulated in the original contract between the creditor and the debtor. Without such a stipulation in the agreement, it is illegal for Accounts Receivable Turkey to charge debtors for any costs incurred during the amicable phase, except as allowed when charging interest.

1.2 Legal proceedings

1.2.1 General

The judicial system in Turkey consists of the High Court, the Court of Appeal, and the Supreme Court of Appeal. The Supreme Court of Appeal is the third and final instance for appealing and reviewing a judgment issued by the lower courts, though the appeal to this court centers more on the proper enforcement and adherence to state and federal statutes rather than on the validity of the debt being appealed.

All civil cases in Turkey are handled by civil divisions of the courts mentioned above. The court of first instance is often the High Court, though smaller claims sometimes go through the Turkish Peace Court in order to be settled more quickly and for a lower cost.

The court system in Turkey is considered well organized and highly efficient when compared to neighboring countries. It should be noted, however, that cases proceeding through this system are still subject to delays and a relatively long period of waiting time before they are fully resolved and able to be enforced against the debtor. Debtors are well known for appealing any ruling in Turkey, and they typically hire seasoned lawyers and experts to represent them in court. This can add to expenses and the case’s duration.

1.2.2 Required documents

In order to begin legal action against a debtor, and work toward the issuance of a payment order, Accounts Receivable Turkey must be in possession of a few documents. These documents will help to verify the debt within Turkey’s courts and allow a judge to move quickly when granting our request for a payment order on behalf of our client. These documents include:

- Original Power of Attorney, notarized by the Turkish Consulate
- Original or certified copies of commercial documents
- Original invoices

If the debtor receives the payment order and files a dispute against the creditor, Accounts Receivable Turkey will require even more documentation in order to prepare the case for a traditional lawsuit procedure. In the event of a dispute, we will require the following documentation:

- Copies of the contract
- Copies of orders, confirmations, and delivery notices
- Copies of any correspondence regarding the debt
- Documentation of oral agreements or negotiations with the debtor
- A prepared list of witnesses or experts in the case of an oral agreement

After Accounts Receivable Turkey has received all of the documents noted above, the case can proceed either amicably or through a defended trial in the courts.

1.2.3 Legal dunning procedure

The legal dunning procedure begins by filing for a payment order through the Bailiff’s Office located closest to where the debtor’s main business address, or home address, is located. This payment order is then served to the debtor, who is effectively summoned to pay the debt’s full balance or file an objection with the court. Any objections to the payment order must be filed by the debtor within seven days of that payment order having been served. If no objections are filed, and no payments are received toward the debt, the debtor risks having their assets attached in an effort to secure the debt.

Essentially, when a payment order is issued by the Bailiff’s Office, the debtor has three potential courses of action:

- Pay the amount due or make satisfactory arrangements
- File an objection to the debt with the court
- Do nothing and risk the consequences

If the debtor has not filed any response, objection, or payment, within seven days, the creditor must go to the Bailiff’s Office and attach both movable and immovable properties in an effort to force collection. This attachment can include the debtor’s bank accounts if the debtor has enough information to force their attachment to the debt.

1.2.4 Lawsuit

While it is actually possible for creditors to file for a lawsuit against a debtor without any prior notification or even a prior payment order, this method is not recommended and is rarely pursued. Instead, a payment order is typically issued first and leads directly to a lawsuit when payment does not occur or when an objection is filed. If the debtor does object to any part of the payment order, any enforcement action that might otherwise be taken against the debtor will be suspended until the outcome is reached in Turkey’s Commercial Court. Debtors who objected to the debt in bad faith are often required to pay fines and fees for prolonging the process and often deliberately delaying enforcement.

After a lawsuit has been initiated with the Commercial Court, both the creditor and the debtor will begin exchanging evidence and opinions with the judge assigned to the case. This process will continue until the judge has examined enough of the evidence to issue a ruling in the case. It may also stop if the judge determines that the debtor objected in bad faith, and thus should be held accountable for the debt and any relevant fines.

After the judge has viewed a satisfactory amount of evidence, a hearing will be called to discuss the case itself. Both the creditor and the debtor must attend this hearing. A decision will be issued, and that decision will either state that the objection was warranted, or that it was filed in bad faith. The judge may also lodge a judgment against the debtor, requiring them to pay.

In any of these outcomes, it is possible for the debtor to file an appeal and send the case to the court of second instance. Unlike the initial objection to the payment order, however, an appeal to the court of second instance will not suspend any enforcement of execution actions taken by the creditor to recover the outstanding debt unless the debtor submits a Bank Guarantee for the full amount of the debt to the Bailiff’s Office during the appeal process.

1.2.5 Costs

Generally, a fee equivalent to 20 percent of the debt’s outstanding balance will be paid to the attorney hired by Accounts Receivable Turkey to represent the client. A fee of 5 percent of the debt’s balance will be reserved for paying court costs during a lawsuit procedure. Additionally, a full 15 percent fee will be charged for attorneys’ fees based on the collected amount awarded in any judgment. If there is no such collection or judgment issue, this fee is reduced to just 5 percent of the claim amount. All court costs in Turkey are governed by the Harclar Kanunu Laws, or the Laws for Turkish Fees.

1.2.6 Expected timeframe

Legal dunning typically takes about eight months to complete. A traditional lawsuit procedure through the Commercial Court will take quite a bit longer, lasting at least three years in most cases. Some of the most complex cases can take up to four or even five years to complete.

1.2.7 Interests and costs in the legal phase

During any debt-related lawsuit in Turkey, the judge overseeing the case reserves the right to wave any interest that has accrued on the outstanding balance of a debt. The judge may also substantially reduce these fees, even if they are not fully eliminated in the ruling handed down by the court. The debtor can also dispute these costs in the interest of having them removed and deducted from the balance of any judgment.

According to Turkish laws and regulations, the losing party in any lawsuit must bear the full cost of court fees, document fees, and other costs of the proceeding. These regulations are laid out in the Usul Hukuk Muhakemeleri Kanunu, or Turkish Civil Process Law. If any case is partially won or settled, the parties will bear a proportional share of the fees based on their degree of victory in the suit.

1.3 Insolvency Proceedings

1.3.1 General

In Turkey, the creditor typically files for insolvency. And, like several of the countries that surround it, Turkey focuses heavily on liquidating the debtor’s assets in order to satisfy the entirety of the debtor’s liabilities. Creditors are generally issued an equal dividend of the proceeds from the liquidation of any assets. In the case of bankruptcy, however, no such dividend is promised and creditors are often urged to act in a “renegade” fashion to secure the amount owed to them by the debtor. Because this is a highly unreliable way of reclaiming any money owed by a debtor, this method is considered more of a threat than an actual method of reclaiming payment. Because debtors will lose control of their company under bankruptcy, even the threat of such action is often enough to secure at least some arrangement from the debtor to satisfy the balance.

If a creditor initiates bankruptcy, it will proceed as an individual action over which the creditor has complete control. It maintains this individual nature from start to finish, including the moment when the court declares the debtor bankrupt. Because this is an individual procedure that puts the creditor in control, the creditor can stall or halt the process at any time if they receive payment from the debtor to satisfy the debt.

1.3.2 Proceedings

Insolvency is initiated by serving a Bankruptcy Order of Payment on the debtor at their main business address or primary residence. No matter how the debtor responds to this document, the creditor who files the insolvency motion must take the matter to court and the court is solely responsible for deciding whether or not the debtor will be declared insolvent or bankrupt. The court case that decides this matter will be between the creditor and the debtor. Any third party creditors who believe that they will be impacted by the outcome of this proceeding can ask the judge to add them to the proceedings, creating a virtual “pool” of creditors whose motives are united.

The creditor has full control over the case and can decide whether to stop the case or prolong it at any time. They can even choose to completely abandon the case at any time, at least until the court has officially declared the debtor to be bankrupt. After bankruptcy has been declared, the creditor ceases to have complete control over the proceedings. At this time, control is given to the entire pool of creditors. A full majority of the creditors must support any action before it can be taken by the court. A court-appointed liquidator will oversee the decision-making process and will formally file those decisions with the court. Creditors will be informed about the court’s decision immediately after it has been delivered, and they will be able to formally lodge a claim against the debtor within 30 days from the decision having been made public.

If any dispute arises between the debtor and the creditor, the court is obligated to resolve that dispute before proceeding through bankruptcy. Furthermore, bankruptcy cannot be declared unless the court has resolved all disputes.

1.3.3 Required documents

In order to file a claim during an insolvency or bankruptcy case, Accounts Receivable Turkey must be in possession of the following documents:

- Copies of invoices, signed by the creditor and notarized
- Original Power of Attorney, notarized

1.3.4 Expected timeframe and outcome

Bankruptcy typically takes one year from the time the declaration has been issued if the debtor does not object to the process. If the debtor does put up a fight, the process will take at least 18 months to fully finish.

To get started today, call us at321-710-3530 to speak with an associate
Send Page To Friend/Bookmark