Payment Undertaking in Enforcement Proceedings

The undertaking must be given in the enforcement file, accepted by the creditor and fully determined: the debt amount, interest, the number and dates of the instalments and the amount of each should be specified so that nothing is left to later calculation. An undertaking that is not accepted by the creditor, or whose elements are uncertain, does not carry the statutory sanction. Foreign creditors should therefore check that the person giving the undertaking is the debtor or a duly authorised representative, and that the authority documents are on file.

Breach of a valid undertaking is sanctioned, upon the creditor's complaint, with coercive imprisonment under Article 340 of the Enforcement and Bankruptcy Law. The sanction is coercive rather than punitive: its purpose is to compel payment, and once the debt covered by the undertaking is performed the ground for the measure disappears. The complaint is lodged within the existing enforcement file, which stays open; the undertaking does not replace the file but is recorded in it. Whether and when the measure can be lifted depends on the facts and should be checked against the current file.

An instalment arrangement that carries the statutory sanction requires the creditor's acceptance. Without it, the debtor's offer to pay over time is simply a proposal, and the creditor may continue enforcement. In practice a creditor weighs the debtor's willingness and ability to pay against the cost and delay of continued enforcement: accepting a determinate undertaking may be sensible when the debtor is solvent but short of liquidity, and risky when it merely postpones the inevitable. Any acceptance should be recorded in the enforcement file.

A private settlement is a contract governed by the Turkish Code of Obligations and is enforced, if the debtor defaults, through ordinary enforcement or litigation. A payment undertaking is given within an existing enforcement file, requires the creditor's acceptance and is backed by coercive imprisonment on complaint. A mediated settlement document prepared in the correct form may carry stronger procedural value than a plain contract, but this must be checked before signing. Which instrument is best depends on whether proceedings have already started, the debtor's assets and how much protection the debtor is willing to sign.