Enforcement and Bankruptcy Law and FAQ Answers

Enforcement and Bankruptcy Law and FAQ Answers. The Enforcement and Bankruptcy Law (EBL) is a fundamental law concerning the forcible collection, upon the creditor’s request and through state power, of debts arising from private law relationships that are not voluntarily paid by the debtor. The primary purpose of this law is, on one hand, to ensure creditors can effectively attain their rights, and on the other, to protect debtors from arbitrary practices and prevent the complete loss of their economic assets. This balance is a reflection of the “Social State” principle adopted by our legal system.

This report has been prepared to clarify the complex structure of Enforcement and Bankruptcy Law by answering the most frequently asked questions. The report begins with fundamental concepts and logically addresses institutions such as individual debt collection (enforcement), collective liquidation (bankruptcy), and financial restructuring (concordat). Each section is detailed from an expert perspective to help citizens and commercial actors understand their rights and obligations.

Part 1: Fundamentals of Enforcement and Bankruptcy Law

Q: What is the fundamental difference between Enforcement Law and Bankruptcy Law?

The distinction between Enforcement Law (Partial Enforcement) and Bankruptcy Law (Universal Enforcement) is the main pillar upon which the debt collection system is built. This distinction is not merely procedural but reflects two different philosophies of debt collection.

• Enforcement Law (Partial Enforcement): Also known as individual proceeding, partial enforcement is a collection method initiated by one or a few creditors against a debtor for a specific debt. The aim of this proceeding is to seize only enough of the debtor’s assets to cover that specific debt. Partial enforcement is applicable to all debtors (natural and legal persons). This system is based on the “first come, first served” principle; meaning, the creditor who initiates the attachment process earlier gains priority over other creditors. This encourages creditors to act quickly.
• Bankruptcy Law (Universal Enforcement): Also known as collective proceeding, universal enforcement is a process where all of the debtor’s creditors come together, and all of the debtor’s attachable assets (the bankruptcy estate) are subject to liquidation. This method is primarily applicable to debtors who are considered “merchants” under the Turkish Commercial Code and other persons legally held responsible as merchants. The fundamental philosophy of bankruptcy is to ensure equality among creditors (“pari passu”). The debtor’s assets are considered the common security for all creditors, and the aim is to prevent a race among creditors by distributing the proceeds fairly according to the order specified in the law (“pro-rata distribution”). In this respect, universal enforcement reflects a policy preference that prioritizes collective justice over individual creditor interests in situations where the debtor is in systematic financial difficulty.

Q: Who are the “Creditor,” “Debtor,” and “Bankrupt”?

These terms define the roles of the parties in enforcement law:

• Creditor: The natural or legal person who initiates the enforcement proceeding and demands payment of the debt.
• Debtor: The natural or legal person against whom the enforcement proceeding is initiated and who is obligated to pay the debt.
• Bankrupt: A debtor for whom a bankruptcy decision has been issued by the court. When a debtor acquires the status of “bankrupt,” it creates a radical change in their legal situation. Instead of being subject to individual enforcement proceedings, they become subject to a collective liquidation process covering all their assets, and their authority to dispose of their assets is severely restricted.

Q: What are the roles of the Enforcement Office and the Enforcement Court?

The Turkish enforcement system is based on a clear separation of duties between administrative execution and judicial review. This structure is designed to ensure the process is both swift and fair.

• Enforcement Office: This is the body that carries out the practical and administrative procedures of an enforcement proceeding. Although located within the courthouse structure, it is not a court but an administrative body. There is at least one enforcement office in the jurisdiction of every court of first instance. Its main duties include accepting the creditor’s request for proceeding, sending a payment order to the debtor, executing attachment procedures, conducting the sale of attached assets, and distributing the proceeds to the creditors. The enforcement office acts as the engine of the process, handling routine procedures without the need for court intervention.
• Enforcement Court: This is a specialized court that supervises the actions of the enforcement offices and quickly resolves specific disputes arising from the enforcement process. Its main functions include examining complaints against the actions of the enforcement office, hearing specific cases such as the removal of the debtor’s objection, and conducting criminal cases related to enforcement offenses. The enforcement court acts as the referee of the system. It provides the debtor with a rapid judicial remedy against erroneous or irregular actions of the enforcement office, instead of requiring a lengthy lawsuit in general courts, thus ensuring the right to a fair trial. This two-tiered structure strikes a balance between the creditor’s need for speed in the collection process and the debtor’s right to legal protection.

Part 2: The Lifecycle of an Enforcement Proceeding

Q: What are the main differences between “Enforcement with a Judgment” based on a court decision and “Enforcement without a Judgment” which is not?

Enforcement proceedings are divided into two main categories based on whether the creditor possesses a court decision. This distinction fundamentally changes the power of the proceeding, the debtor’s defense options, and how the process unfolds.

• Basis: Enforcement without a judgment does not require a court decision or any document proving the debt. The creditor’s unilateral declaration of the debt’s existence is sufficient to initiate the proceeding. In contrast, enforcement with a judgment, as the name implies, must be based on a court decision (“ilam”) or documents legally considered equivalent to a judgment (e.g., notarized deeds, settlement agreements made in court).
• Subject Matter: Enforcement without a judgment can generally only be used for the collection of monetary and security claims. For demands such as the delivery of goods, the performance of an act, or eviction from a property, a court judgment must typically be obtained first.
• Effect of Objection: The most significant difference lies in the consequences of an objection. In enforcement without a judgment, a simple objection made by the debtor within 7 days, without any requirement to provide a reason or evidence, automatically and completely stops the proceeding. In enforcement with a judgment, the debtor’s objection does not stop the proceeding because the existence of the debt is already established by a court decision. The proceeding can only be stopped in exceptional cases, such as when the debtor provides a security deposit and obtains a “Stay of Execution” (Tehiri İcra) decision from a higher court.
• Jurisdiction: In enforcement without a judgment, the competent enforcement office is generally the one in the debtor’s place of residence, and the debtor can object to the jurisdiction. In enforcement with a judgment, the creditor has the right to initiate the proceeding in any enforcement office in Turkey, and the debtor has no right to object to the jurisdiction.

The following table summarizes the key differences between these two types of proceedings.

Table 1: Comparison of Enforcement with and without a Judgment

Q: How is an enforcement proceeding initiated? (“Request for Proceeding”)

The enforcement process begins when the creditor submits a “Request for Proceeding” to a competent enforcement office. This request can be made in writing, orally, or electronically. The request for proceeding must contain the mandatory elements specified in Article 58 of the EBL: identity and address information of the creditor and debtor, the value of the claim in Turkish Lira, the reason for the debt, the chosen type of proceeding, and the signature of the creditor or their representative. If the claim is based on a document, a copy of this document must also be attached. The proceeding is officially considered to have started on the date the necessary fees are paid.

The ease and accessibility of initiating a proceeding without a judgment (even an oral statement is sufficient) give the creditor significant power. The system allows the creditor to act on a “shoot first, ask questions later” basis. However, this power is balanced by the debtor’s ability to completely stop the proceeding with a simple objection. This structure reveals a fundamental tension in the system: an easy start for the creditor, an easy stop for the debtor. This design forces the main legal battle—the discussion of the merits of the debt—to take place in court through “action for annulment of objection” or “action for removal of objection” lawsuits after the proceeding is stopped by an objection. The initial request for proceeding does not legally establish the debt but serves as a formal allegation against the debtor, compelling them to respond.

Q: What is a “Payment Order,” and what are the legal deadlines and options after receiving it?

Upon a valid request for proceeding, the enforcement office issues and serves a “Payment Order” to the debtor. The payment order is the first official document informing the debtor of the proceeding. The debtor must choose one of three options within 7 days of receiving the payment order: pay the debt, object to the debt, or make a declaration of assets. In some special proceedings, such as those for negotiable instruments, this period can be shorter, like 5 days. This 7-day period is a “final deadline,” and missing it can lead to serious loss of rights for the debtor. Failure to object by the end of this period means the proceeding becomes final, and the creditor can move to the attachment stage.

Q: How can a debtor object to a payment order, and what are the consequences of a valid objection?

The objection must be made within the 7-day legal period to the enforcement office that sent the payment order. The objection can be made via a written petition or orally; an oral objection is recorded in a minute by the enforcement office. The debtor can object to the entire debt, a part of it (“partial objection”), the signature on the instrument underlying the debt (“objection to signature”), or the jurisdiction of the enforcement office where the proceeding was initiated (“objection to jurisdiction”). A valid objection made within the time limit immediately and automatically stops the enforcement proceeding without a judgment. From that moment on, the creditor cannot take any enforcement action (attachment, sale, etc.) until the objection is resolved by a court. This is the debtor’s most powerful and immediate defense mechanism in a proceeding without a judgment.

Q: If the debtor objects, what legal remedies are available to the creditor?

When the proceeding stops due to the debtor’s objection, the ball is back in the creditor’s court. To continue the proceeding, the creditor must overcome this objection and has two main options:

1. Action for Annulment of Objection: The creditor can file this lawsuit in the general competent courts (e.g., Civil Court of First Instance) within 1 year of being notified of the objection. This is a full-fledged lawsuit aimed at proving the existence of the debt with any kind of evidence (witnesses, invoices, contracts, etc.).
2. Action for Removal of Objection: The creditor can file this action in the Enforcement Court, which has a faster and simpler procedure, within 6 months of being notified of the objection. However, this option is only available if the creditor possesses one of the strong and specific documents listed in Article 68 of the EBL (e.g., a simple promissory note where the debtor acknowledges the signature, a notarized document, a receipt issued by official authorities).

The choice between these two legal paths is a critical strategic decision for the creditor and depends entirely on the nature of the evidence they hold. The “Action for Removal of Objection” is much faster and more efficient, but the standard of proof is very high. The “Action for Annulment of Objection” is longer and more costly but allows for a wider range of evidence, such as witness testimony. With this distinction, the legal system encourages creditors to support their claims with strong documents, as this promises a more effective collection process in case of a dispute.

Q: When does an enforcement file “become inactive” or subject to the statute of limitations?

The legal fate of an enforcement file is subject to two different timeframes, short-term and long-term:

• File Becoming Inactive (Düşmesi): If the creditor does not take any action on the file (e.g., request an attachment) for 1 year, the file is removed from active processing due to inactivity and archived (“düşer”). However, this does not mean the debt is extinguished.
• Renewal of the File: An inactive file can be reactivated (“renewed”) by the creditor at any time within the general statute of limitations period by paying a renewal fee.
• Statute of Limitations: The debt is extinguished when the primary statute of limitations applicable to the debt expires. According to the Code of Obligations, the general statute of limitations is 10 years. For some types of claims, such as those based on negotiable instruments (promissory notes, bills of exchange), this period is shorter (e.g., 3 years for a promissory note). Once the 10-year period expires, the debtor can apply to the enforcement office, assert that the debt is time-barred, and request the permanent closure of the file.

Part 3: Seizure of Assets (Attachment)

Q: Which assets and rights are legally non-attachable? (Detailed Analysis of EBL Article 82)

Article 82 of the Enforcement and Bankruptcy Law provides a detailed list of assets and rights that cannot be attached, aiming to protect the minimum living standard and economic future of the debtor and their family. This list not only provides humanitarian protection but also reflects a sophisticated social policy that prevents the destruction of the debtor’s potential to recover economically. The law makes a clear distinction between luxury and necessity, and between personal consumer goods and income-generating means of production.

The main non-attachable items are:

• State Property: Due to the principle of continuity of public services, state property cannot be attached.
• Necessary Household Items: Items essential for the debtor and their family to continue their lives (refrigerator, oven, bedding, basic furniture) cannot be attached. However, this protection is not unlimited. If there are multiple items serving the same purpose (e.g., two televisions), only one is left to the debtor, and the other can be attached. Money, antiques, valuable ornaments, and similar assets are outside this protection.
• Professional Tools: All tools, equipment, and books necessary for the debtor to continue their profession or trade cannot be attached. For example, a tailor’s sewing machine, a lawyer’s professional books, or a mechanic’s toolset fall into this category.
• Farmer’s Property: If the debtor is a farmer, the land, farm animals, and agricultural tools essential for their and their family’s livelihood cannot be attached.
• Debtor’s Modest Home: A modest residence suitable for the debtor’s social status and family needs cannot be attached. However, if the value of the house is significantly more than what is needed to buy a “modest” home, the house can be sold. From the proceeds of the sale, an amount sufficient for the debtor to purchase a new modest home is set aside, and the remainder is paid to the creditors.
• Salaries and Pensions: Not the entire salary, but only a certain portion can be attached (details in the next question). Additionally, certain incomes such as Social Security retirement pensions, disability pensions, student scholarships, and compensation paid for bodily harm are generally not attachable.
• Pets: Pets kept for non-commercial purposes cannot be attached.

These attachment exemptions are a forward-thinking legal policy aimed at enabling the debtor to become a productive individual again, rather than making them completely destitute and a burden on society. The goal is to collect a debt without destroying the debtor’s future economic capacity.

Q: What are the rules for “Salary Attachment”? What is the maximum percentage that can be deducted from a salary?

The creditor, based on a finalized enforcement file, can request that an attachment notice be sent to the debtor’s employer. The rules for salary attachment are very clear and strict:

• Deduction Rate: The law mandates the attachment of one-fourth (1/4 or 25%) of the debtor’s net salary. This rate cannot be exceeded without the debtor’s consent. Similarly, the enforcement officer has no discretion; even if the debtor’s remaining salary is insufficient for their livelihood, they must make this minimum one-fourth deduction.
• Exception: For alimony claims, this rate can be higher.
• Multiple Attachments: If there are multiple attachments on a salary, they are placed in a queue. Priority is determined by the date the attachment notice was served on the employer. Deductions are made for the first attachment until the debt is fully paid, after which deductions begin for the second attachment in the queue.
• Employer’s Responsibility: The employer who receives the attachment notice is legally obligated to make the deductions and regularly deposit them into the enforcement office’s bank account. An employer who fails to fulfill this obligation becomes personally liable for the amount not deducted, and the creditor can directly attach the employer’s assets.

Q: How does “e-Attachment” on a bank account work, and how is it lifted?

E-attachment is the process of electronically seizing funds in a debtor’s bank accounts and has significantly shifted the balance of power in favor of creditors in debt collection.

• Process: The process begins when the enforcement office, upon the creditor’s request, sends an electronic “attachment notice” to the general directorates of banks via integrated systems like UYAP. Unlike traditional attachment, there is no need for an enforcement officer to physically go anywhere. This electronic notification allows the creditor to instantly freeze the debtor’s accounts in all banks nationwide with a single request. Upon receiving this notification, the bank is obligated to check the debtor’s accounts and place a “block” on funds up to the amount of the debt specified in the notice. The block applies only to the existing balance at the moment the notification arrives; new funds deposited into the account after that moment are not automatically blocked by the same notice. For the blocked funds to be transferred to the enforcement file, a second instruction from the enforcement office is usually required.
• Lifting: The e-attachment is lifted when the debt is fully paid or when a payment agreement is made with the creditor. After the debt is paid, the creditor institution (e.g., the tax office) or the enforcement office sends an electronic instruction to the bank to lift the block. The bank then lifts the block, usually within 1-3 business days.

The speed and effectiveness of this system provide a great advantage for the creditor but carry serious risks for the debtor. A debtor might find all their bank accounts frozen before they have had a chance to receive a payment order and exercise their right to object. This situation can suddenly paralyze the debtor financially and make it difficult for them to effectively use their legal defense rights.

Q: How is a real estate property (house, land) attached, and what is the process for its sale?

A creditor with a finalized enforcement proceeding can request the attachment of real estate registered in the debtor’s name.

• Recording the Attachment in the Land Registry: The enforcement office writes a notice to the relevant Land Registry Office, informing them of the attachment decision. The Land Registry Office records this attachment as an “encumbrance” (şerh) on the property’s official record. This encumbrance makes the attachment public and enforceable against third parties who may later purchase the property.
• Time Limit for Requesting Sale: The creditor must request the sale of the property within one year after the attachment is recorded in the land registry. If the sale is not requested within this period, the attachment on the property is automatically lifted (“haciz düşer”).

Part 4: Sale of Attached Assets (Liquidation)

Q: What are the stages of selling an attached asset, from appraisal to auction?

The sale of an attached real estate property is a transparent process governed by strict legal rules to protect the rights of all parties and obtain a fair market value. The sale is conducted only through public auction.

1. Request for Sale: The creditor must request the sale within the legal period (1 year for real estate from the date of attachment) and deposit an advance for the sale costs.
2. Appraisal: The enforcement office has the market value of the property determined by an expert. This “appraisal report” is served on all interested parties, including the debtor and creditors. The parties can object to this value by applying to the Enforcement Court within 7 days of receiving the report.
3. Preparation for Sale: The enforcement office prepares an “auction specification” and a “list of encumbrances” containing the conditions for participating in the auction, the property’s features, and any existing burdens (mortgages, usufruct rights, etc.).
4. Announcement: The auction is announced in a nationally circulated newspaper and must be announced on the official Electronic Sales Portal. For real estate auctions, the announcement must be made at least one month before the auction date.
5. Auction: The sale is conducted electronically according to the procedures specified in the law.

Q: What are the rules for the first and second auctions, and how is the sale price determined?

• First Auction: The auction starts at 50% of the appraised value. For the sale to be finalized in the first auction, the highest bid must meet three conditions simultaneously: (1) it must reach at least 50% of the appraised value, (2) it must be higher than the total of any priority claims, and (3) it must cover the costs of the sale and distribution.
• Second Auction: If no buyer meeting these conditions emerges in the first auction, a second auction is held after a certain period. The same three conditions are required for a valid sale in the second auction.
• Failure of Sale: If no buyer emerges in the second auction or the required price is not reached, the sale request is canceled. The creditor must then re-request the sale and start the process over.
• Payment: The winning bidder must pay the auction price in cash to the enforcement office, usually within 7 days. If payment is not made, the bidder’s deposit is forfeited, and the auction is canceled.

Part 5: Critical Lawsuits for Debtors and Creditors

Q: What is a “Negative Declaratory Action,” and when can it be filed?

A Negative Declaratory Action is a lawsuit filed by a person (the debtor) to have a court declare that a debt claimed by another person (the creditor) does not actually exist or is no longer valid. This lawsuit can be filed based on various substantive law claims, such as the debt has been paid, is time-barred, the underlying contract is invalid due to fraud or duress, or it has been set off. To file this lawsuit, the debtor must have a “legal interest” in obtaining this declaration. This action can be filed at any stage, either before an enforcement proceeding has been initiated or after it has started, up until the debt is actually paid. This lawsuit is the primary legal means for a debtor to assert their claims regarding the merits of the debt in general competent courts.

Q: Does filing a “Negative Declaratory Action” automatically stop ongoing procedures like attachment and sale?

The answer to this question depends on when the lawsuit is filed and demonstrates a critical distinction that shows how the law encourages debtors to be proactive:

• Lawsuit Filed Before the Proceeding Starts: If the lawsuit is filed before the enforcement proceeding, the debtor can request a “preliminary injunction” from the court to prevent the creditor from initiating a proceeding. The court may grant this injunction if the debtor deposits a security of at least 15% of the alleged claim. This is a reasonable guarantee to cover the creditor’s potential damages.
• Lawsuit Filed After the Proceeding Starts: If the lawsuit is filed after the enforcement proceeding has begun, the mere filing of the lawsuit does not stop the proceeding. The creditor can continue with procedures like attachment and preparation for sale. It is much more difficult for the debtor to stop the proceeding at this stage. To obtain a preliminary injunction preventing the payment of funds in the enforcement office’s account to the creditor, the debtor must deposit a security of at least 115% of the alleged principal claim and its ancillaries into the court’s account.

This significant difference between the 15% and 115% security deposit rates is a deliberate choice of the legal system. Once a proceeding is initiated, the creditor’s claim gains a certain formality, and the system does not allow this proceeding to be easily stopped. A debtor who waits until a proceeding is initiated to question their debt must bear a much heavier financial burden to stop it. This encourages debtors with legitimate claims to assert them early and at a lower cost, while discouraging the use of lawsuits merely as a tool for delay.

Q: What is a “Restitution Action,” and under what conditions can a debtor recover money paid under duress?

A Restitution Action (Geri Alma Davası) is a lawsuit filed by a debtor to recover money they were forced to pay under the “threat of compulsory enforcement” (i.e., attachment of their property, deduction from their salary), when they were not actually indebted.

For the lawsuit to be filed, the following conditions must be met:

1. A debt that did not exist in terms of substantive law must have been paid.
2. The payment must have been made under the pressure and coercion created by a finalized enforcement proceeding. Voluntary payments made before the proceeding is finalized are not covered.
3. The lawsuit must be filed within a 1-year preclusive period from the date the debt was paid. If this period is missed, the right to file the lawsuit is lost.

If a debtor is forced to pay the debt while a negative declaratory action is pending, the negative declaratory action automatically transforms into a restitution action, and the court continues the case on that basis.

Part 6: Basic Information on Bankruptcy

Q: Who is subject to bankruptcy in Turkey? Is it only merchants?

The general rule is that only “merchants,” as defined in the Turkish Commercial Code, are subject to bankruptcy for all their debts. However, the law extends this rule with important exceptions:

• Those Liable as Merchants: Individuals who actually operate a commercial enterprise or act as if they do, even if not registered in the trade registry, are held liable as merchants towards bona fide third parties and their bankruptcy can be requested. A “ship-owning partnership” (donatma iştiraki), a type of partnership specific to maritime trade, is also subject to bankruptcy despite not being considered a merchant.
• Those Subject to Bankruptcy by Special Laws: This category includes individuals who are not merchants but undertake significant responsibilities in commercial life:
  • Company Partners: All partners of a general partnership and the general partners (with unlimited liability) of a limited partnership are personally subject to bankruptcy for the company’s debts.
  • Those Who Have Ceased Trading: A merchant who has notified and announced their cessation of trade in the registry continues to be subject to bankruptcy for one year from the date of this announcement.
  • Bank Managers and Controlling Shareholders: Under the Banking Law, certain managers, auditors, and controlling shareholders who cause a bank to incur losses or be transferred to the Fund can be held personally subject to bankruptcy, limited to the damage they have caused.

These exceptions demonstrate the legislator’s intent to hold key actors at the center of commercial responsibility accountable through the most comprehensive and serious collection method, the institution of bankruptcy.

Q: What are the legal consequences of a bankruptcy decision for the debtor (“bankrupt”) and their authority to dispose of their assets?

With the issuance of a bankruptcy decision, the debtor legally acquires the status of “bankrupt.” This status does not eliminate the bankrupt’s fundamental rights or legal capacity, but it radically restricts their capacity to dispose of their assets.

• Formation of the Bankruptcy Estate: As of the moment bankruptcy is declared, all of the bankrupt’s attachable assets, receivables, and rights form a whole, which is called the “bankruptcy estate.”
• Transfer of Disposal Authority: The bankrupt’s authority to dispose of the bankruptcy estate in any way (selling, transferring, pledging, etc.) ceases. This authority passes to the legal representative of the estate, the “bankruptcy administration.” All transactions made by the bankrupt on the estate’s assets after the declaration of bankruptcy are invalid against the creditors.
• Stay of Proceedings: All enforcement proceedings previously initiated against the bankrupt (except for those based on the foreclosure of a pledge) are stayed and are dismissed upon the finalization of the bankruptcy decision.
• Acceleration of Debts: All of the bankrupt’s debts, including those not yet due, become immediately payable (“muaccel olur”) upon the declaration of bankruptcy.
• Right to a Fresh Start: The bankruptcy decision effectively creates a “legal firewall” around the bankrupt’s past financial life. Income earned by the bankrupt through their personal labor after the bankruptcy decision (e.g., a salary from a new job) is not included in the bankruptcy estate. This shows that the law gives the bankrupt a chance to make a fresh economic start and rebuild their life. This regulation is not just a punitive measure but also a rehabilitation mechanism.

Q: What is the “Bankruptcy Estate,” and how is it liquidated? (Ordinary and Simple Liquidation)

The bankruptcy estate is the legal entity formed by all of the bankrupt’s attachable assets at the time of the declaration of bankruptcy. “Liquidation” is the process of selling these assets to convert them into cash and distributing the proceeds to creditors according to the order specified in the law.

Liquidation is carried out using two different procedures, depending on the size and complexity of the estate:

1. Ordinary Liquidation: This is the more comprehensive and formal liquidation procedure that is generally applied. It is used when the assets in the estate are sufficient to cover the costs of liquidation. In this process, a “bankruptcy administration” is elected by the creditors, “creditors’ meetings” are held, and procedures such as recording and examining claims, and selling assets are carried out according to a detailed procedure.
2. Simple Liquidation: This is a faster and simpler procedure applied when it is understood that the assets in the estate are not sufficient to cover the costs of ordinary liquidation. In this procedure, a separate bankruptcy administration is not elected; the liquidation procedures are carried out directly by the enforcement office, and creditors’ meetings are generally not held.

If there are no assets in the bankruptcy estate, the bankruptcy office decides to “suspend the liquidation.” In this case, if none of the creditors requests the continuation of the liquidation by paying the costs in advance, the bankruptcy file is closed.

Part 7: Financial Restructuring and Special Cases

Q: What is a “Concordat,” and how does it help businesses avoid bankruptcy?

A concordat is a restructuring agreement made by an honest debtor whose financial situation has deteriorated, with the majority of their creditors as prescribed by law, which becomes binding upon the approval of the commercial court. Its main purpose is to enable a business on the brink of bankruptcy to continue its commercial activities by restructuring its debts into a manageable form, instead of liquidating it. This way, both the debtor avoids bankruptcy, and the creditors have the opportunity to collect more than they would in a bankruptcy liquidation. Any debtor, whether subject to bankruptcy or not, who is unable to pay their debts as they fall due or is in danger of being unable to do so, can request a concordat.

Concordat agreements can generally take three forms:

• Discount Concordat (Tenzilat Konkordatosu): Creditors waive a certain percentage of their claims.
• Maturity Concordat (Vade Konkordatosu): Creditors agree to the payment of the full debt over a longer period.
• Mixed Concordat (Karma Konkordato): It combines elements of both a reduction in the amount of the claim and an extension of the payment term.

Q: What are “Temporary Respite” and “Definitive Respite,” and how do they affect creditors?

The “respite” (mühlet – period/postponement) period is the heart of the concordat process. This is a legal “ceasefire” period declared by the court that protects the debtor from creditors’ proceedings. This process transforms the relationship between the debtor and creditors from a hostile collection to a cooperative negotiation conducted under supervision.

• Application and Temporary Respite: When the debtor applies to the court with comprehensive financial statements and a preliminary restructuring project, if the court finds the request serious upon initial review, it immediately grants a 3-month “Temporary Respite.” This period can be extended by another 2 monthsif necessary. During this period, the court appoints a “concordat commissioner” to assess the project’s chances of success.
• Definitive Respite: If the commissioner submits a positive report indicating that the debtor’s project is likely to succeed, the court grants a 1-year “Definitive Respite.” This period can also be extended by another 6 months in compelling circumstances. The actual restructuring and negotiation with creditors take place during this period.

The effect of the respite decision (both temporary and definitive) on creditors is immense:

• Stay of Proceedings: During the respite period, no enforcement proceedings, including those for public receivables under Law No. 6183, can be initiated against the debtor; all previously initiated proceedings are stayed.
• Stay of Interest Accrual: As a rule, interest ceases to accrue on unsecured claims from the beginning of the respite.
• Prohibition of Attachment: Preliminary attachment and preliminary injunction decisions cannot be enforced on the debtor’s assets.

This protective shield provides the debtor with a vital “breathing space” to stabilize their operations, regulate their cash flow, and prepare a final agreement project by negotiating with creditors under the supervision of the commissioner. This interim period protects not only the debtor but also the creditors as a whole. It prevents individual creditors from causing a chaotic liquidation process that would result in everyone receiving less by dismantling the company’s assets and forces all parties to the negotiating table.

Q: What is the “Offense of Breaching a Commitment,” and what is its penalty?

Breaching a commitment is a special offense regulated in the Enforcement and Bankruptcy Law that carries a penalty involving deprivation of liberty. This offense occurs when a debtor, after a finalized enforcement proceeding, goes to the enforcement office and signs an official “commitment letter” to pay their debt in specific installments, and then fails to fulfill this commitment without a reasonable excuse.

• Validity Conditions: For a breach of commitment to constitute an offense, the commitment letter must be drawn up in strict compliance with the formal requirements specified in the law. At the time of the commitment, the total debt to be paid (including principal, accrued interest up to that point and interest to accrue until the end of the installments, attorney’s fees, costs, etc.) must be calculated and written down item by item, leaving no room for doubt. The absence or incorrectness of any of these elements renders the commitment invalid, and its breach does not constitute an offense.
• Penalty: A debtor who breaches a valid commitment can be sentenced to up to 3 months of coercive imprisonment (tazyik hapsi) by the Enforcement Criminal Court upon a complaint filed by the creditor within 3 months of learning of the breach. Coercive imprisonment is not a judicial prison sentence but a measure aimed at compelling the debtor to pay. The debtor is released immediately upon paying the committed and unpaid amount after entering prison.

Part 8: Practical Information and “How-To” Guide

Q: How can I check for enforcement files against me via e-Government?

Citizens can easily track enforcement proceedings initiated against them through the e-Government Gateway. The steps to follow are:

1. Log in to www.turkiye.gov.tr with your T.C. identity number and e-Government password.
2. Type “İcra Dosyası Sorgulama” (Enforcement File Inquiry) into the search bar on the main page.
3. Select the service offered by the Ministry of Justice from the search results.
4. On the screen that opens, you will see a list of all enforcement files in which you are a party (as either debtor or creditor).
5. This list provides basic information such as the enforcement office where the file is located, the file number (case number), the names of the parties, and the file’s opening date. You can get more detailed information about the documents and actions in the file content with the “View File” option.

Additionally, to check if there is an e-attachment on your bank accounts, you can use the relevant service of the Revenue Administration by typing “Banka Hesaplarına Uygulanan Elektronik Haciz Sorgulama” (Inquiry for Electronic Attachment on Bank Accounts) into the search bar.

Q: How and where is an enforcement debt paid?

An enforcement debt can be paid via wire transfer or EFT to the bank account (IBAN) of the enforcement office handling the proceeding. It is crucial to write the file’s case number in the description field when making the payment to ensure it is credited to the correct file. Additionally, some public receivables, such as tax debts, can be paid through the Revenue Administration’s (GİB) website or the UYAP Citizen Portal. When the entire debt (including principal, interest, fees, and costs) is paid, the file is closed (“infaz olur”).

Q: Who ultimately pays the costs of an enforcement proceeding?

The costs required to initiate an enforcement proceeding, such as the application fee and notification expenses, are initially paid by the creditor. However, all of these paid costs are added to the file’s debt. At the end of the proceeding, the debtor is liable to pay both the principal debt and accrued interest, as well as all these proceeding costs incurred by the creditor. Therefore, the entire financial burden of the enforcement proceeding ultimately falls on the debtor who is found to be at fault.

Conclusion

Enforcement and Bankruptcy Law is a complex system of balance that protects the legitimate rights of creditors while securing the basic living standards and legal protections of debtors. The topics covered in this guide reveal the fundamental dynamics and workings of this system.

For debtors, the critical importance of the 7-day objection period starting from the notification of the payment order, the right to file a negative declaratory action for claims regarding the merits of the debt, and the legal protections regarding non-attachable assets are of vital importance. For creditors, choosing the correct type of proceeding, strategically determining the legal remedies to pursue in case of an objection (annulment/removal of objection), and adhering to legal deadlines for the sale of attached assets (e.g., 1 year for real estate) are the fundamental requirements for collecting their claims.

Given the technical details of the processes, strict formal requirements, and preclusive periods, even the smallest procedural error can lead to serious loss of rights. Therefore, it should be remembered that the information presented in this report is for general informational purposes only and can in no way replace professional legal advice. It is strongly recommended that individuals and institutions who are parties at any stage of an enforcement or bankruptcy process seek legal support from a lawyer specializing in this field to take the most appropriate steps for their specific situation.