Enforcement and Bankruptcy LawHow to Initiate Enforcement Proceedings and What is the Objection Process?

Collection of receivables is one of the most common legal problems in commercial and individual relationships. A creditor who wants to collect his receivables from a debtor who does not pay his debt on time can achieve this goal by utilising the legal power of the state. This legal way is called “enforcement proceedings”. While enforcement proceedings enable the creditor to collect the debt, it also gives the debtor the right to object and defend himself when faced with an unfair demand. This process is carried out in accordance with the provisions of the Enforcement and Bankruptcy Law No. 2004 (EBL) and aims to maintain the balance between the creditor and the debtor.

Legal Framework Legal Basis of Enforcement Proceedings

The Execution and Bankruptcy Law is the basic law regulating how receivables are collected by state power, how the debtor’s assets are seized (attachment) and how these assets are converted into money (sale). Execution proceedings are basically divided into two: enforcement with judgement and enforcement without judgement.

• Execution with judgement: If the creditor has a court decision (judgement) or a document that is considered as a judgement by law (for example, notary deed, execution surety), it is a type of enforcement proceeding initiated on the basis of this document. In a judgement enforcement proceeding, the debtor has no right to object to the debt, because the debt has already been fixed by a court judgement. The debtor can only claim that the judgement on which the proceeding is based has expired or that he/she has paid the debt.
• Execution without a judgement: It is a type of proceeding initiated by the creditor without a court decision, without relying only on a document (invoice, contract, promissory note, etc.) or without any document, directly applying to the enforcement office. In execution without judgement, which is the most common way of enforcement proceedings, the debtor has the right to object to the debt and the proceedings.

Process of Initiating Enforcement Proceedings (Non-Prosecution Proceedings)

1. Follow-up Request: The creditor or his/her representative applies to the authorised enforcement office by filling out a “follow-up request” form. In this form, the identity/address information of the creditor and debtor, the amount of the receivable, the interest rate and the underlying documents are specified. As a general rule, the authorised enforcement office is the enforcement office in the debtor’s place of residence.
2. Issuance and Notification of the Payment Order: The enforcement office shall issue a “payment order” based on the enforcement request. This payment order is served to the debtor’s address. The payment order is an official document that gives the debtor a legal period of time to pay or object to the debt.
3. Finalisation of the Proceeding: If the debtor does not pay the debt or object to the proceeding within the legal period (usually 7 days) from the notification of the payment order, the enforcement proceeding becomes final. With the finalisation of the proceeding, the creditor gains the right to request the attachment of the debtor’s assets.

Debtor’s Objection Process

The debtor who is served with the payment order may object to the whole or part of the debt or its accessories such as interest. The objection is an important legal defence tool that stops the proceedings.

• Duration and Form of Objection: The debtor may file a written or oral objection to the enforcement office where the proceeding is carried out within 7 days from the notification of the payment order. A valid objection made within the time limit automatically stops the enforcement proceedings.
• Consequences of the objection: In order to continue the execution proceedings upon objection, the creditor must apply for legal remedies. The creditor has two options:
  1. Cancellation of Objection: The creditor may file a “cancellation of objection lawsuit” in the general courts (Civil Court of First Instance or Commercial Court of First Instance) within 1 year from the notification of the objection. In this case, the creditor must prove his/her receivable according to the general rules of proof. If the lawsuit is concluded in favour of the creditor, the proceeding will continue from where it left off and the debtor may be sentenced to pay a compensation for denial of execution not less than 20% of the receivable.
  2. Case for Removal of Objection: If the creditor has one of the documents listed in Article 68 of the Enforcement Law (ordinary deed, notary deed, notary deed, documents issued by official offices within their authority, etc.), the creditor may file a “lawsuit for the removal of the objection” at the Enforcement Law Court within 6 months from the notification of the objection. This case is a faster procedure compared to the cancellation of the objection.

Enforcement proceedings are an effective legal mechanism for the collection of receivables. While it provides the creditor with the opportunity to collect his/her receivables through the power of the state, it also gives the debtor the right to object to unjustified claims within 7 days. The debtor’s objection within the time limit stops the proceedings and requires the creditor to apply to the court to prove its claim. In this process, where deadlines and procedural rules are very important, it is of great importance that both creditors and debtors receive legal support from a lawyer in order to prevent loss of rights.