DIRECT PAYMENT MADE BY THE DEBTOR TO THE CREDITOR DURING ONGOING EXECUTION PROCEEDINGS

A common practical scenario occurs when a debtor under active execution proceedings transfers funds directly to the creditor or their attorney instead of depositing them into the execution file. In legal terminology, this is called “External Collection” (Haricen Tahsilat). This article examines its legal consequences for debtors, creditors, and attorneys.

Direct Payment is a Valid Performance

Direct payment to the creditor effectively discharges the debt under substantive law. The Turkish Code of Obligations focuses on whether funds entered the creditor’s estate. If received by the actual creditor, the debt is extinguished to that extent.

However, execution offices do not automatically know about external payments. The execution file continues to show the debt as unpaid until formal notification is submitted to the file.

Order of Set-Off in Partial Payments (TBK Art. 100)

Under Article 100 of the Turkish Code of Obligations, partial payments are applied first to secondary claims (accrued interest, enforcement expenses, attorney fees) and remaining balances to principal debt. Debtor EFT notes (e.g., “February rent”) do not override this statutory order unless the debtor proves secondary items were fully paid separately.

Notification Obligation

For external payments to affect execution files, formal notification is mandatory:

1. Direct notification to the execution file (petition with bank receipt attached).
2. Evidentiary notification to the creditor’s attorney (written notice, notary, registered e-mail).

Notifying only the principal creditor does not automatically halt enforcement if an attorney manages the file, as knowledge is not legally imputed to the attorney without formal notice.

Duties and Consequences by Parties

1. For the Debtor:

• Duties: Immediately send bank receipts to the creditor’s attorney and execution file; request an updated file calculation (dosya kapak hesabı); verify collection fees (tahsil harcı).
• Risks of Omission: Enforcement/seizures continue without fault by the creditor; running interest remains active; litigation costs and counter-attorney fees in negative clearance lawsuits fall on the debtor due to personal fault.

2. For the Creditor & Creditor’s Attorney:

• Duties: Promptly report external collections to the file; calculate set-offs accurately under TCO Art. 100; update interest calculation dates.
• Risks of Omission: Risk of double-collection claims, negative clearance lawsuits, unjust enrichment liabilities, and fee collection difficulties.

3. For Attorneys:

• Debtor’s Attorney: Must warn clients to formally report payments to avoid ongoing interest and double payment risks.
• Creditor’s Attorney: Must check accounts regularly and update files to avoid disciplinary action or over-collection claims.

Impact on Statutory Attorney Fees

External payments made after enforcement initiation do not remove the creditor attorney’s right to statutory execution fees (icra vekâlet ücreti), as professional labor was exerted upon opening the file.

Why Manage This Process with a Lawyer?

Direct payments trigger complex substantive and procedural mechanisms (performance, set-off, notification, interest accrual, fee calculation). Professional guidance prevents unjust enrichment claims, double payments, and unnecessary court expenses.

Conclusion

External collection extinguishes debt in substantive law but does not automatically close execution files. Proper management requires timely formal notification by all parties.

Precedent Decisions

1. Effect of External Payment and Set-Off Rule: Court of Cassation 3rd Civil Chamber, T. 10.10.2023, E. 2022/7791, K. 2023/2615 — Partial payments made during execution are applied first to interest and expenses under TCO Art. 100 before principal reduction.
2. Failure to Notify External Payment & Litigation Expenses: Court of Cassation 13th Civil Chamber, T. 07.12.2010, E. 2010/8852, K. 2010/16416 — Where a debtor paid funds directly to a bank account without notifying the execution office or creditor, the creditor was not at fault for continuing enforcement; court costs were assigned to the plaintiff debtor.
3. Responsibility for Enforcement Costs and Fees: Court of Cassation 8th Civil Chamber, T. 08.03.2017, E. 2017/1771, K. 2017/3135 — Lacking proof that the creditor was notified of pre-proceeding payments, enforcement was valid, and the debtor remained liable for enforcement costs, interest, and attorney fees.
4. Set-off Against Interest and Expenses: Court of Cassation 8th Civil Chamber, T. 15.12.2016, E. 2015/30, K. 2016/16966 — Unnotified payments are treated as partial payments set off against interest and costs first per TCO Art. 100.
5. Notice and Collection Fee Procedure: Court of Cassation General Assembly of Civil Chambers, T. 17.05.2023, E. 2021/205, K. 2023/455 — Payment orders and collection notices served on the attorney of record in the underlying judgment conform with procedural law.