Top-Rated Debt Collection Agency in Turkey

Step 1: Building a Solid Foundation for Debt Recovery in Turkey

Thorough preparation is the cornerstone of a successful debt collection process. In Turkey's intricate legal landscape, meticulous case preparation ensures clarity, legality, and efficiency, paving the way for a swift resolution.

Step 1.1: Verify the Validity of Payment Terms

Understanding and validating payment terms is crucial in the debt collection process. In Turkey, these terms vary by transaction type.

• B2B (Business-to-Business): Turkish Commercial Code (TCC) and Turkish Code of Obligations (TCO) outline regulations to protect businesses, especially SMEs, from late payments. Absence of agreed payment dates in contracts defaults to a 30-day payment term after invoice receipt.
• B2C (Business-to-Consumer): While not explicitly codified, consumer protection laws ensure transparency and fairness in payment conditions, emphasizing clear communication of payment terms and conditions.
• B2G (Business-to-Government): Payment terms for transactions involving government entities are often stipulated in specific contracts or governed by public procurement regulations, ensuring timely payments.

Regulatory framework: The TCO and the TCC primarily govern the validity of payment terms, supplemented by specific regulations for payment institutions under Law No. 6493.

Step 1.2: Check the Status of Limitations

A statute of limitations defines the timeframe within which a creditor must initiate legal action to collect a debt. In Turkey, this period varies:

• General debts: 10-year statute of limitations.
• Public debts, including taxes: 5 years from the due date.
• Rental payments, interest, and wages: 5 years.
• Credit card debts: Generally, 10 years, extendable under certain conditions.

Interrupting the statute of limitations can be achieved through debtor's debt acknowledgment or by initiating legal proceedings. Here's an example of a letter format to interrupt the statute of limitations, compliant with Turkish law:

1. Address the debtor formally, including full legal name and address.
2. Clearly state the debt amount, original due date, and any interest accrued.
3. Express the intention to interrupt the statute of limitations explicitly.
4. Include a demand for payment or debt acknowledgment.
5. Ensure the letter is dated and signed by someone with legal authority in your organization.
6. Send the letter via a method that provides delivery confirmation.

Step 1.3: Assembling Essential Documents

Gathering necessary documentation is a fundamental step in asserting your claim. For effective debt collection in Turkey, essential documents include:

• Contracts, invoices, or any agreements evidencing the debt.
• Legal notices sent to the debtor, including demand letters.
• Court orders or judgments, if applicable.
• Records of all communications with the debtor, including emails, letters, and call logs.

Maintaining a meticulous record of communications not only supports your claim but also ensures transparency and legality throughout the collection process. Documentation is critical for any legal proceedings and proves that debtors have been adequately notified.

Step 2: Initiating a Dialogue with Your Debtor

Maintaining a direct line of communication with debtors during the amicable collection phase is pivotal. A conversation fosters cooperation and can lead to mutually beneficial resolutions. Phone calls, in particular, stand as the most direct and effective way to negotiate amicable solutions.

Preparing to Call Your Debitor

Understanding Legal Frameworks: Delving into extrajudicial debt collection communications in Turkey, it's imperative to acknowledge the significance of transparency and fairness. The legal landscape mandates a respectful approach, steering clear of any practices that could be deemed aggressive or unethical.

Documenting Debt Details: The key to a successful call lies in preparation. Having comprehensive information at your fingertips—covering the debt's origin, itemized amounts (principal, interest, fees), and a history of past communications—not only streamlines the process but also reinforces your position.

Best Practices When Calling Your Debtors

Dos:

• Engage in respectful and professional dialogue, striving to comprehend the debtor's predicament.
• Articulate the purpose of the call clearly, alongside the specifics of the owed amount.
• Seek out amicable solutions, like payment plans that accommodate the debtor's financial abilities.

Don'ts:

• Avoid any language or demeanor that could be interpreted as aggressive or harassing.
• Refrain from making demands or promises that exceed the bounds of legality.

Documenting the Call

Keeping Records: A detailed record of the conversation not only aids in keeping track of progress but also serves as critical documentation should the case escalate to judicial proceedings. This meticulous approach underscores the professionalism and integrity of the collection process.

Follow-up Communication: It's essential to encapsulate the outcomes of the call and any agreements made into a written summary, promptly dispatched to the debtor. This step ensures that both parties have a clear understanding and record of the agreed terms, fostering transparency and trust.

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Step 3: How to Send a Payment Reminder (With Free Template)

In the landscape of debt collection, the utilisation of payment reminders plays a pivotal role during the amicable phase—an effort to recuperate debts without proceeding to legal actions. This approach is not only a crucial step in maintaining positive relations with debtors but also fortifies the premise of a debtor's willingness to fulfill their obligations.

Understanding Payment Reminders in Turkey

In Turkey's debt collection law, a payment reminder serves as a formal nudge to debtors about their due obligations. It's important to distinguish between a 'friendly reminder'—an informal nudge regarding an approaching or just lapsed due date, and a 'dunning letter' which is more formal and often utilised when payments are considerably overdue.

Legal Framework for Payment Reminders

Legal considerations of payment reminders in Turkey encompass several regulations, ensuring a reminder's compliance with the Civil Code. Sending a payment reminder can officially signify a debtor's default without needing to resort to legal proceedings initially. This action underlines the debtor's awareness and acknowledgement of the overdue payment, setting a foundation for further collection efforts if required.

Preparing to Send a Payment Reminder

For a payment reminder to be effective and legally compliant, including certain essential information is paramount:

• Full name and contact details of the debtor.
• Exact total amount due, including any interest or late fees if applicable.
• Clear reference to the invoice or agreement underpinning the owed amount.
• The deadline for the expected payment and any consequences of further delay.

It's crucial to firstly verify the debt's validity and ensure all communications are accurate and strictly professional.

Crafting an Effective Payment Reminder

Adequate preparation paves the way for drafting a reminder that's not only professional but also encourages payment. Essential elements to include:

• A respectful and professional tone throughout.
• Detailed information about the debt, such as the invoice number, total amount due, and a summary of prior attempts to resolve the issue.

Sending the Reminder

While payment reminders can be sent through various channels like email or postal mail, choosing a method that ensures proof of delivery is crucial for potential legal proceedings. Each method has its advantages and drawbacks, and the choice often depends on the situation at hand and the debtor's communication preferences.

Follow-Up After Sending a Reminder

If a payment reminder goes unanswered, it's recommended to send subsequent reminders at predefined intervals. Should the debtor respond but is unable to pay in full, negotiating payment terms or installment plans is a viable next step, balancing firmness with understanding.

Documentation and Record-Keeping

Meticulous record-keeping of all communications with the debtor, including dates, methods, and responses, is indispensable. These records not only serve as evidence in potential legal proceedings but also help in managing the collection process efficiently.

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Free Payment Reminder Template - Turkey

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Dear [Debtor's Name],

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I hope this message finds you well. I wanted to bring to your notice that, according to our records, an outstanding amount of [Exact Amount Owed], pertaining to invoice number [Invoice Number], remains unpaid. This amount was due on [Due Date], and as of today, it is [Number of Days Late] days overdue.

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We understand that sometimes circumstances can prevent timely payments, and we’re more than willing to discuss arrangements that might ease the payment process. Below are the details of the amount owed:

• Invoice Number: [Invoice Number]
• Amount Due: [Exact Amount Owed]
• Due Date: [Due Date]

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We kindly request that you address this payment at your earliest convenience. If you've already made the payment, please disregard this notice and accept our thanks. However, if there has been any oversight or you find discrepancies in our records, please contact us immediately to resolve the issue.

If you foresee difficulties in settling the full amount by the due date, we are open to discussing a payment plan that suits both parties. It's important for us to find a solution that helps you fulfill your obligations without additional stress.

Please note, consistent with Turkish law and best practices, maintaining accurate and timely payments is crucial for both our businesses. We aim to resolve this matter amicably and avoid any formal proceedings that may arise due to continued non-payment.

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Your cooperation and prompt attention to this matter are highly appreciated. Should you need to discuss this further, do not hesitate to reach out. We look forward to your response and settling this matter swiftly.

Best regards,

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[Your Name]
[Your Contact Information]

Step 4: Send a Letter of Formal Notice

Demand letters are pivotal in debt collection, offering a formal nudge to debtors to settle unpaid dues amicably.

Legal Foundations for Demand Letters

In Turkey, demand letters serve as a legally recognized step in the debt collection process. Under Turkish law, these letters, known as ihtarnames, must meticulously adhere to specific procedural guidelines to ensure their enforceability. They are instrumental in setting the legal groundwork for potential judicial action, signalling the creditor's intention to pursue legal avenues should the payment not be settled. This requirement not only formalizes the creditor's claim but also provides a clear timeline and framework for the debtor to respond, either by settling the debt or initiating negotiations.

Preparing a Demand Letter

To prepare a demand letter, it is crucial to include all necessary legal and factual elements. Based on Debitura's decade-long experience in Turkey, an effective demand letter should clearly state the amount owed, reference the original agreement under which the debt arose, and specify the deadline for payment as per the Turkish Code of Obligations. Incorporating a detailed account of previous attempts to collect the debt, including dates of communication and any partial payments, further strengthens the letter's position. Ensuring accuracy in these details underpins the seriousness of the letter, and by extension, the creditor's resolve to recover the debt.

Crafting an Effective Demand Letter

Creating an effective demand letter requires more than just adhering to legal requirements; it should also aim to open a dialogue with the debtor. Keeping the tone professional yet firm is vital; it should emphasize the serious nature of the situation while encouraging the debtor to resolve the matter to avoid further legal actions. Based on insights from Debitura, including a clear call to action, such as suggesting a payment plan or a meeting to discuss the debt, can significantly increase the chances of settlement without necessitating judicial intervention.

How to Send and Follow Up on a Demand Letter

Properly sending and following up on a demand letter is as critical as its content. In Turkey, sending the letter through a notary is recommended to provide indisputable evidence of its delivery. Following the dispatch, maintaining a careful record of all communications is crucial for any potential legal proceedings. If the letter fails to elicit a response or leads to partial commitments, Debitura advises a structured follow-up approach, adjusting strategies based on the debtor's responses and readiness to engage, ensuring the creditor's rights remain paramount throughout.

Step 5: Calculate Collection Costs and Late Payment Fees

In Türkiye, the journey of recovering a debt extends beyond the mere retrieval of the principal amount. Legal regulations allow creditors to levy additional fees to cover the costs arising from late payments and the collection process itself. Understanding these fees is crucial for both creditors and debtors to ensure compliance and to prepare financially. The following fees are permissible under Turkish law:

• Collection Costs and Legal Fees: These encompass the expenses incurred during the enforcement phase, including legal representation fees, calculated based on the minimum attorney fee tariff.
• Enforcement Fees: These fees vary according to the debt recovery stage, with rates of 4.55% after serving the payment order, 9.10% post-seizure, and 11.38% subsequent to asset sale.
• Additional Expenses: This category covers various costs associated with the collection process, such as transportation to the seizure location, notification-related expenses, and, if necessary, costs for the public sale announcement.
• Banking and Contractual Charges: For creditors in the banking sector, various banking law-related charges, taxes, and expenses stipulated in the credit agreement can also be added.

It's important to note that while these fees apply across the board, the exact amount and nature of some fees may vary depending on whether the transaction is B2B or B2C, with particular attention paid to contractual agreements and specific laws regulating the banking sector.

Example

Consider a scenario where a creditor is owed a principal amount of 5000 EUR. Should the debtor fail to meet the payment deadline, various fees and charges commence accruing. Assuming that the debt recovery process initiates and advances to the point of asset seizure, the calculation of additional costs could be summarized as follows:

• Legal Fees: Assuming a calculated rate from the minimum attorney fee tariff. For our example, we’ll allocate 200 EUR for simplicity.
• Enforcement Fees: At 9.10% post-seizure, this would equate to 455 EUR.
• Additional Costs: Estimating a total of 100 EUR for transportation, notification, and sale announcement.
• Total: Thus, the debtor could face a cumulative additional cost of 755 EUR on top of the 5000 EUR principal, resulting in a total owed amount of 5755 EUR.

This example serves to illustrate the financial impact late payment and recovery processes can have on the debtor's total owed amount, underlining the importance of timely payments.

Regulatory Framework and Limitations on Fees

The imposition of fees in the debt collection process in Türkiye is carefully regulated to ensure fairness and to prevent the accrual of undue burdens on debtors. These regulations are enumerated in the Turkish Code of Obligations and the Banking Law for specific banking-related charges. Importantly, although creditors have the right to recover costs related to debt collection, there exist caps and guidelines that prevent the imposition of excessive charges. It's vital for parties involved in debt collection activities to be thoroughly familiar with these regulations to ensure ethical and compliant practices.

At Debitura, with our decade-long experience in the field of debt collection in Türkiye, we are well-acquainted with the legal landscape and committed to assisting our clients in navigating these processes efficiently and ethically, ensuring compliance and maximized recovery within the bounds of Turkish law.

Step 5: Calculate Collection Costs and Late Payment Fees

Detailed Overview of Permissible Fees

In Türkiye, the journey of recovering a debt extends beyond the mere retrieval of the principal amount. Legal regulations allow creditors to levy additional fees to cover the costs arising from late payments and the collection process itself. Understanding these fees is crucial for both creditors and debtors to ensure compliance and to prepare financially. The following fees are permissible under Turkish law:

• Collection Costs and Legal Fees: These encompass the expenses incurred during the enforcement phase, including legal representation fees, calculated based on the minimum attorney fee tariff.
• Enforcement Fees: These fees vary according to the debt recovery stage, with rates of 4.55% after serving the payment order, 9.10% post-seizure, and 11.38% subsequent to asset sale.
• Additional Expenses: This category covers various costs associated with the collection process, such as transportation to the seizure location, notification-related expenses, and, if necessary, costs for the public sale announcement.
• Banking and Contractual Charges: For creditors in the banking sector, various banking law-related charges, taxes, and expenses stipulated in the credit agreement can also be added.

It's important to note that while these fees apply across the board, the exact amount and nature of some fees may vary depending on whether the transaction is B2B or B2C, with particular attention paid to contractual agreements and specific laws regulating the banking sector.

Example

Consider a scenario where a creditor is owed a principal amount of 5000 EUR. Should the debtor fail to meet the payment deadline, various fees and charges commence accruing. Assuming that the debt recovery process initiates and advances to the point of asset seizure, the calculation of additional costs could be summarized as follows:

• Legal Fees: Assuming a calculated rate from the minimum attorney fee tariff. For our example, we’ll allocate 200 EUR for simplicity.
• Enforcement Fees: At 9.10% post-seizure, this would equate to 455 EUR.
• Additional Costs: Estimating a total of 100 EUR for transportation, notification, and sale announcement.
• Total: Thus, the debtor could face a cumulative additional cost of 755 EUR on top of the 5000 EUR principal, resulting in a total owed amount of 5755 EUR.

This example serves to illustrate the financial impact late payment and recovery processes can have on the debtor's total owed amount, underlining the importance of timely payments.

Regulatory Framework and Limitations on Fees

The imposition of fees in the debt collection process in Türkiye is carefully regulated to ensure fairness and to prevent the accrual of undue burdens on debtors. These regulations are enumerated in the Turkish Code of Obligations and the Banking Law for specific banking-related charges. Importantly, although creditors have the right to recover costs related to debt collection, there exist caps and guidelines that prevent the imposition of excessive charges. It's vital for parties involved in debt collection activities to be thoroughly familiar with these regulations to ensure ethical and compliant practices.

At Debitura, with our decade-long experience in the field of debt collection in Türkiye, we are well-acquainted with the legal landscape and committed to assisting our clients in navigating these processes efficiently and ethically, ensuring compliance and maximized recovery within the bounds of Turkish law.

Step 6: Calculate Interest Rates

Understanding the imposition of interest rates on late payments is crucial for international creditors operating in Turkey. This section outlines the statutory interest rates for late payments across different types of transactions and provides insight into the regulatory framework governing these rates.

Statutory Interest Rates for Late Payments

The process of debt collection in Turkey involves the accrual of interest on the principal amount when a debtor fails to meet payment deadlines. Here's an overview of the applicable interest rates for late payments:

• B2C (Business-to-Consumer) Transactions: Interest rates for late payment in consumer transactions are subject to agreements between parties but must align with consumer protection laws to prevent exorbitant charges.
• B2B (Business-to-Business) Transactions: In commercial dealings, the delay increase rate is set at 3.5% per month, reflect recent legal adjustments. Contractual agreements can specify different rates as long as they adhere to commercial standards and legal limits.
• B2G (Business-to-Government) Transactions: Public debts, including taxes and other government-related fees, accrue interest at rates determined by specific laws, such as the Law on the Procedure for Collection of Public Receivables.

Interest is calculated from the day following the payment due date until the actual payment date. Compound interest may be applied under certain conditions, although its use is tightly regulated, particularly in consumer transactions.

Example: Calculation for a B2B Debt

Consider a scenario where the principal amount owed by a business (debtor) to another business (creditor) is 5000 EUR, and the payment is overdue. Assuming the delay increase rate is 3.5% per month, here's how the interest would be calculated:

Interest for 1 month: 5000 EUR * 3.5% = 175 EUR

Therefore, if the payment is delayed by 1 month, the debtor would owe a total of 5175 EUR, inclusive of the principal amount and interest.

Regulatory Framework and Limitations on Interests

The rates for delay interest are governed by various laws, including the Turkish Code of Obligations and the Banking Law, directing the lawful imposition of interest on late payments. While parties can agree on different rates, such agreements must fall within the legal parameters established to protect both consumer rights and commercial fairness. Critically, creditors must understand these regulatory caps and guidelines to ensure compliance and ethical practice during the debt collection process.

Step 7: Settle the Debt with a Payment Plan

Offering a settlement or a payment plan to a debtor can be a strategic move during the amicable phase of debt collection. It not only demonstrates flexibility and understanding towards the debtor's financial situation but also maximizes the chances of debt recovery. In Turkey, the legal framework, chiefly the Execution and Bankruptcy Law (İcra ve İflas Kanunu - İİK), facilitates such agreements under certain conditions. This guide outlines how to effectively establish a payment plan that is both legally compliant and conducive to recuperating your dues.

Formalities: Securing a Legally Binding Payment Plan

Creating a legally binding payment plan necessitates adherence to specific formalities, ensuring the agreement is recognized by law and enforceable. Here's how to secure a payment plan that acknowledges debt and effectively resets the statute of limitations:

• Documentation: The agreement should be documented in writing, clearly outlining the payment terms, schedule, total debt amount, and any interest or fees included. Although Turkish law does not prescribe a specific template, ensuring comprehensiveness and clarity in the document is crucial.
• Legal Acknowledgment: For utmost validity, especially before seizure, making the agreement in the presence of or reporting it to the execution office is advisable. This adds a layer of legal acknowledgment, significantly reinforcing the agreement's enforceability.
• Non-compliance Clauses: Include clear consequences of non-compliance, such as resumption of the execution process or potential coercive imprisonment (up to three months), as per İİK article 340, for agreements post-seizure.
• Halt on Statute of Limitations: Acknowledge that the agreement pauses the statute of limitations, resuming only if the debtor fails to comply with the agreed terms or after the specified long-term installment period exceeds ten years.

Sample Payment Arrangement

Here's a sample outline of a payment arrangement that complies with Turkish law and embodies best practices:

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Payment Plan Agreement

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Between [Creditor's Name] (the Creditor) and [Debtor's Name] (the Debtor)

Debt Acknowledgment: The Debtor acknowledges a debt to the Creditor amounting to [Total Amount], inclusive of any statutory interest and collection costs till [Date].

Payment Schedule: The Debtor agrees to repay the total debt in [number] monthly installments, each amounting to [Installment Amount], starting from [Starting Date] and concluding by [Final Payment Date].

Consequences of Non-Compliance: Failure to comply with this payment schedule will result in the immediate resumption of the execution process, with potential legal actions as described in İİK articles 340 and 111.

Legal Recognition: This agreement is made [in the presence of the execution office/outside the execution office but will be reported to the same], ensuring its legal validity and enforceability. Any disputes notwithstanding, this document serves as binding evidence of the agreed terms.

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Signatures

_____________________                      _____________________
Creditor's Signature                            Debtor's Signature
Date:                                                        Date:

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