5-Year Installment Arrangement for Loan and Credit Card Debts

The button has been pressed for a critical legal step that closely concerns millions of debtors in Türkiye. A new bill submitted to the Grand National Assembly of Türkiye aims to alleviate the financial burden of loans and credit card debts that have reached the enforcement stage. According to the proposal, the interest burden and follow-up costs on loans and credit card debts that debtors have difficulty paying will be completely erased. The most crucial point of the regulation is that it offers the opportunity to pay the principal amount that the debtor must pay in installments over a period of up to 5 years, taking into account economic conditions.

Searching for a New Solution to the Debt Spiral
Increasing inflation and the cost of living in recent years have deeply affected households' borrowing habits and payment capacities. Many citizens were crushed under the interest burden of the loans and credit cards they used to meet their basic needs and fell into bankruptcy. In the current system, trying to pay only the minimum amount of the debt or struggling with the interest burden makes it almost impossible to reduce the principal amount of the debt. This causes citizens to fall into a "debt spiral" and hit financial bottom. This new proposal presented to the Parliament aims to serve as a lifeline at this point.

Experts emphasize that such restructuring moves have both social and economic dimensions. From a social perspective, alleviating the debt burden can positively affect the general well-being and psychological peace of society. From an economic perspective, reducing non-performing loans (NPL) and reintegrating debtors into the system is critical for the health of the banking sector and general financial markets. However, it is expected that the regulation will be implemented meticulously in a way that will not disrupt the liquidity balances of banks and will be implemented with a fair mechanism.

What to Expect Next? All eyes are now on the relevant commissions within the Turkish Grand National Assembly. The proposal's discussions at the commission stage, the elaboration of the articles and the final voting process will determine the scope and applicability of the regulation. If the proposal becomes law, a new payment period will begin for enforceable debt holders and the liquidation of debts will become much more predictable. In the coming period, the details of which banks and which debt types the regulation will cover will be closely followed by markets and citizens.