Enforcement Cost Calculator

When an application is made to the enforcement office to collect a debt, various fee and expense items arise at the very first stage of the proceedings. These items vary according to the value of the proceedings, their type (with or without a judgment) and the stage at which they are concluded. Calculating enforcement costs correctly is important both for the creditor, in order to foresee the cost, and for the debtor, in order to check the amount reflected in the enforcement file. In this article, for information purposes, we address the legal framework of enforcement costs, how the application fee, advance fee and collection fee are determined, how the attorney fee is added to the file, and the most commonly encountered mistakes.

The Legal Basis of Enforcement Costs

The legal framework of the fees paid in enforcement proceedings is drawn by the Fees Law No. 492 and the Tariff No. (1) annexed to this Law. In the "enforcement and bankruptcy fees" section of the tariff, items such as the application fee, advance fee, collection fee and prison fee are regulated separately. The attorney fee, on the other hand, is reflected in the enforcement file on the basis of the Minimum Attorney Fee Tariff (AAÜT). As regards enforcement expenses, the basic principle is that, pursuant to the Enforcement and Bankruptcy Law No. 2004, the costs of the proceedings are, as a rule, imposed on the debtor.

Fee amounts and fixed items are updated each year by applying the revaluation rate through the communiqués of the Ministry of Treasury and Finance. The Minimum Attorney Fee Tariff is likewise renewed every year. For this reason, the current amount of the fee and charge payable in a given set of proceedings is determined according to the tariff for the year in which the proceedings were commenced; tables from a previous year may give a misleading result.

The Main Expense Items in Enforcement Proceedings

The cost of enforcement proceedings does not consist of a single amount; it is made up of the sum of several items. The main items are as follows:

• Application fee: A fixed amount charged once for each set of enforcement proceedings; it is independent of the value of the proceedings.
• Advance fee: In proceedings without a judgment, this is the fee calculated by applying a per-mille rate to the claim (principal claim) that is the subject of the proceedings, and charged in advance when the proceedings are opened. Its application differs in proceedings based on a judgment.
• Collection fee: The fee charged on the amount collected where the claim is collected by way of enforcement. Its rate varies according to the stage at which collection takes place.
• Attorney fee: If the proceedings are conducted with an attorney, this is the enforcement attorney fee calculated under the Minimum Attorney Fee Tariff and claimed from the debtor.
• Expense advance: The expenses deposited for service of documents, the file, the bar stamp, attachment, sale and similar operations.

Some of these items (the application fee, the advance fee and the expense advance) are paid by the creditor at the outset of the proceedings; the collection fee, on the other hand, arises when the claim is collected.

How Are the Advance Fee and Collection Fee Calculated?

In proceedings without a judgment, the advance fee is found by applying the per-mille rate specified in the tariff to the principal claim amount that is the subject of the proceedings. This fee is paid in advance by the creditor when the proceedings are opened and is later imposed on the debtor.

The collection fee, on the other hand, arises upon the actual collection of the claim and is calculated on the amount collected. The rate of the collection fee is graduated according to the stage at which payment is made:

• If the debtor pays at the outset of the proceedings, before any attachment has been made, a lower-rate collection fee is applied.
• For collections made after the attachment stage, the rate increases.
• For collections made by way of the sale of attached property, the highest rate is applied.

The fee paid in advance is, as a rule, set off against the collection fee that subsequently arises; that is, the advance fee deposited at the opening is counted towards part of the collection fee. For this reason, it is a mistake to think of the advance fee and the collection fee as two independent additional costs.

The Enforcement Attorney Fee

If the proceedings are conducted through an attorney, an enforcement attorney fee is added to the enforcement file. This fee is calculated according to the rates and fixed amounts provided for enforcement proceedings in the Minimum Attorney Fee Tariff. As the amount of the claim increases, the attorney fee also changes in a graduated manner; the tariff further contains a minimum fixed threshold, and if the calculated fee falls below this limit, the fixed amount is taken as the basis.

The enforcement attorney fee differs from the litigation attorney fee and is generally provided for as a certain proportion of it. Even if the debtor does not object to the proceedings and makes payment, they may be liable for the attorney fee where the statutory conditions are met. For this reason, it is important for the debtor to assess the attorney fee reflected in the file as part of the total debt.

To Whom Are the Costs Ultimately Imposed?

In enforcement proceedings, the rule is that the costs of the proceedings are imposed on the debtor. The creditor pays the application fee, the advance fee and the expense advance at the outset; however, once the proceedings become final and collection is made, these expenses are collected from the debtor together with interest and the attorney fee. If the debtor brings the proceedings to an end by a justified objection, or if the court finds the proceedings unjustified, different outcomes may arise as regards the burden of costs and liability. For this reason, the answer to the question "who pays the costs?" depends on how the proceedings are concluded.

Points to Watch Out For

• Current tariff: Both the fee amounts and the attorney fee change every year. The current tariff for the year in which the proceedings were commenced must be taken as the basis in the calculation.
• Distinguishing the principal claim from interest: The advance fee is calculated on the principal claim; including interest, expenses and the attorney fee in the base may produce a different result.
• Collection stage: The collection fee rate is not fixed; whether payment is made before attachment or at the sale stage significantly affects the result.
• The expense advance may be recovered: Any advance deposited by the creditor and left unused may be refunded at the end of the proceedings or set off against the collection.
• Objection and cost: The debtor's objection may halt the proceedings; in that case, the avenues the creditor must pursue (annulment/removal of the objection) may give rise to a further lawsuit and expense.

Common Mistakes

• Calculating with the old tariff: A calculation made with the fee and charge amounts of a previous year does not reflect the actual cost.
• Adding the advance fee and the collection fee separately: Since the advance fee is set off against the collection fee, adding these two items entirely separately makes the total cost appear higher than it is.
• Forgetting the attorney fee: Failing to take the attorney fee into account in proceedings conducted with an attorney understates the total amount that will fall due for the debtor.
• Ignoring the collection stage: Assuming the collection fee consists of a single rate leads to the actual fee being miscalculated on payments made after attachment or sale.
• Mistaking the expense advance for a cost: Ignoring the fact that an unused advance may be refunded causes the actual expense to appear greater than it is.

A Short Example Scenario

Suppose a creditor initiates enforcement proceedings without a judgment for a claim of 100,000 TL. At the opening, a fixed application fee is first paid. Then, the advance fee is calculated by applying the relevant per-mille rate to the principal claim of 100,000 TL and is deposited at the outset of the proceedings. In addition, an expense advance is paid for service of documents and file expenses; if the proceedings are conducted with an attorney, an attorney fee is also added to the file. If the debtor pays at the outset of the proceedings, before any attachment is made, a lower-rate collection fee arises, and the advance fee deposited at the beginning is set off against this amount. If the debtor delays payment and collection takes place only at the attachment or sale stage, the total cost also increases because the collection fee rate will rise.

This example is intended only to illustrate the logic; the actual amount varies according to the current tariff for the year in which the proceedings were commenced, the type of claim, and the specific circumstances of the proceedings.

Conclusion

Enforcement costs are a whole made up of the application fee, advance fee, collection fee, attorney fee and expense advance, shaped according to the value and stage of the proceedings. Correctly grasping the relationship between the advance fee and the collection fee, the fact that the collection fee changes according to the collection stage, and the fact that the expenses are, as a rule, imposed on the debtor, is the first step in planning the cost of the proceedings realistically. The information on this page is of a general nature; for a fee and expense table relating to specific proceedings, it is advisable to consult the current tariff and to seek advice from an attorney.