Summary Procedures for Debt Collection in Turkey

Summary Procedures for Debt Collection in Turkey

The Code of Civil Execution and Bankruptcy of 1932 provides also a summary procedure for collection of liquidated debts. A liquidated debt is a debt, the amount of which has been determined by the parties or by operation of law. Liquidated debts may be collected through a speedy procedure commenced at the Civil Execution Office, the attachment procedure, without recourse to the ordinary court proceedings. In addition the ordinary procedure, there is a special attachment procedure for claims based on commercial paypers.

1.Ordinary Attachment Procedure

Attachment proceedings for the unsecured liquidated claims, that is, the claims which are not within the coverage of a security interest such as mortgage or pledge, commence through a request filed with the execution office pursuant to Articles 58-144 C.E.B.

The execution office serves on the debtor a ‘payment order’. With this payment order, the debtor is requested to pay the debt and the expenses within 7 days from the receipt of the payment order by the debtor. The debtor may oppose the claim within 7 days before the executive office. The opposition of the debtor suspends the attachment proceedings. In this case, the creditor may either institute a lawsuit before the commercial court for the annulment of the opposition or apply to the summary court for the cancellation of the opposition, provided that he can establish the existence of the claim by virtue of any of a document bearing the signature of the debtor and containing a liquidated amount.

If the request for annulment of the opposition is dismissed, the creditor, upon request by the debtor, will be ordered to pay at least 20% of the claim as compensation to the debtor. The same rule shall apply in favor of the creditor if the opposition is annulled.

The judgments of the summary court regarding the annulment of the opposition may be appealed to the Court of Cassation by either party within ten days.

If the opposition is annulled, the attachment proceedings shall continue and the assets of the debtor will be attached and sold by the executive office in an execution sale, and the creditor will be satisfied from the proceeds of such execution sale.

2.Attachment Procedure for Claims Based on Commercial Papers

Attachment proceedings based on commercial papers are governed by special rules stipulated in Articles 167-176 (b) of C.E.B. Such proceedings commence through a request filed with the executive office. The execution officer examines whether a given instrument has the qualities of a commercial paper. Once the executive officer determines that there is a commercial paper and the claim is due and payable, he will serve on the debtor a payment order. By this payment order, the debtor is requested to pay the debt and the expenses incurred by the creditor in connection with the attachment proceedings within 10 days from the receipt of the payment order by the debtor. The debtor may oppose the claim within 5 days before the summary court on the following grounds: The debtor may argue that (a) there is no such a debt as claimed by the creditor; (b) the debt has already been paid or, its payment has been suspended; or (c) the statute of limitations for the claim has expired. The summary court would accept the debtor’s oppositions only if the debtor can prove its arguments by virtue of either an official deed or a document signed by the creditor.

In principle, an opposition by the debtor does not cease the attachment proceedings, save for the sale. In other words, despite the opposition, the preparatory acts of the executive office for an execution sale will continue until the auction stage, but the auction will not take place until the summary court renders a judgment with respect to the opposition. As an exception to this rule, if the summary court, from the face of the documents submitted by the debtor, tends to believe that the debt is either paid, suspended or the statue of limitations for the debt has expired, it will decide to temporarily cease the attachment proceedings.

In case of acceptance of the debtor’s opposition, the creditor, upon request by the debtor, will be ordered to pay at least 20% of the claim as compensation to the debtor. The same rule shall apply in favor of the creditor if the opposition is refused. The judgments of the summary court regarding the acceptance or refusal of the opposition may be appealed by either party within ten days.

Law of Procedure

If the summary court holds for the debtor and accepts its opposition, the attachment proceedings will be canceled. If the opposition is refused, the assets of the debtor will be attached and sold by the executive office for the satisfaction of the creditor as discussed below.

  1. Following the cancellation of the debtor’s opposition by the summary court, or the commercial court, as the case may be, the executive officer, upon request by the creditor, attaches movable or immovable properties of the debtor and appoints a panel of experts to appraise the value of the attached property.

The appraisal report will be served upon the concerned parties, that is, the creditor, the debtor, and other creditors, if any, who have already security interests or attachments over the attached property. All parties shall have a right to oppose the appraisal report before the summary court within 7 days from the date of service. The summary court, after examining the oppositions, may, at its own discretion, decide to assign a new panel of experts for obtaining a new appraisal report. The public auction, through which the attached property shall be sold, shall be made on the basis of the appraisal value.

The appraisal value and the place and dates of the auctions shall be announced in newspapers. In the public auction, the attached property may be sold for a price corresponding to 50% of the appraisal value. If such price cannot be reached in the initial auction, a second auction shall be organized. In this second auction, the mortgaged property may be sold for a price covering at least 40% of the appraisal value, a new auction procedure shall be started.

The creditor should request the sale of the attached property within a prescribed period, that is, two years for immovables and one year for movables, from the delivery date of the payment order to the debtor. Should the director fail to demand auction within that time limit, the debt collection proceedings shall cease, and it will become necessary to initiate new proceedings.

The creditors may also secure payment from third persons owing money to the defendant. This is possible through the garnishment procedure. In such a case creditors, in order of their priority in entering judgment, may secure at least one-fourth of the income of the defendant from his employer.

If the defendant transfers property fraudulently to his wife or other persons with the intention of avoiding payment of his just debts, such transfers may also be set aside.

The plaintiff may ask that the defendant, if he is a merchant, he declared bankrupt and that all his assets be collected and distributed proportionally among his creditors. The debtor may also demand his own bankruptcy.

  1. If a judgment is for the recovery of immovable property in Turkey, the defendant is ordered by the executive officer to leave. If he does not comply with this order, he and his movable property may physically and forcibly be removed from the premises by the executive officer.
  2. If the judgment is in the nature of a negative injunction, commanding the defendant to refrain from doing an act, disobedience is published criminally in Turkey.

The party’s failure to obey is made a crime by statute, and he is subject to punishment in a separate criminal action.

  1. If the judge orders the defendant to perform an affirmative act, then upon his failure, the execution officer accomplishes it by force and with the same effect as if the defendant himself had complied with the judgment. For example, if an order required the defendant to return a child to the plaintiff, or a chattel, and he failed to do so, the executive officer would take direct forcible steps to accomplish the command of the judgment.
By | 2018-05-28T13:26:48+00:00 May 28th, 2018|Debt Recovery|Comments Off on Summary Procedures for Debt Collection in Turkey