As the value of the lira plummets and inflation soars in Turkey, newly released data shows that Turkish citizens are also in the midst of a rapidly deepening debt crisis. Millions of people are now facing legal proceedings for unpaid debt.
Individuals in Turkey have acquired 127.8 billion Turkish Lira in loan and credit card debt since January 2021, the daily BirGün reported. In the last week alone, as the lira has skyrocketed to above 13 to the dollar, consumer loan debt owed to banks increased by 788 million lira. The total debt owed to banks, financing companies, and to the state-run housing commission, TOKİ, has reached 1 trillion 37 billion Turkish Lira.
As of Nov. 19, the total debt of Turkish citizens to banks and loan distributors was 979.1 billion Turkish Lira. 23 billion lira of this debt is past due.
The vast majority of existing individual debt - over 783 billion lira - is from personal loans, while 196.1 billion lira is from credit cards. With the government sticking firmly to its economically unorthodox low-rate policy, causing even higher inflation and further drops in the value of the lira, these numbers are only likely to climb.
The cost of this debt to consumers increases day by day – despite the drop in interest rates by the central bank, interest on personal and consumer loans remains high at an average of 21.9%, according to the bank's data.
This has left many unable to pay their debts. According to the central bank, 3,693,071 people in Turkey now owe over 23 billion Turkish Lira in overdue personal loan debt. 221,577 citizens were added to this list this year alone. These millions of people are now facing legal proceedings for their unpaid sums, and have been added to the “black list” for further financing.
Many of these millions of people are now facing the threat of debt collectors confiscating their belongings. In Turkey, enforcement offices collect indebted individuals' valuables, homes, cars, and other belongings and sell them off to repay overdue debt. Between Jan. 1 and Nov. 26, almost 7 million new files were brought to bankruptcy authorities, 1 million 392 thousand higher than in the same period last year.