Paying Your Debt in Installments? How Partial Payments Are Allocated to Interest Under TBK Article 100

There is an issue frequently encountered in commercial relationships and creditor-debtor disputes: rather than paying a debt in a single sum, the debtor tries to clear it over time through partial payments. Are these payments deducted from accrued interest, or directly from the principal debt? This seemingly technical question is in fact a critical legal matter that directly affects the amount that ends up in the creditor's pocket. In this article we explain, in light of Court of Cassation (Yargıtay) decisions, the order of allocation for partial payments and the correct method of calculating interest under Article 100 of the Turkish Code of Obligations (TBK).

Summary of the Situation

In a creditor-debtor relationship, a debtor with an overdue debt may attempt to clear it not in a single payment but through partial payments made on different dates. The debtor generally wants these payments to be deducted directly from the principal, because in that case the principal decreases quickly and the amount of interest accruing on it also falls. The law, however, has adopted a different rule that protects the creditor.

The Legal Issue

The essence of the question is this: where a debtor is in default (has not paid the debt on time), should a partial payment made by the debtor first be deducted from interest and expenses, or directly from the principal? And when there are multiple partial payments, how should this calculation be carried out chronologically?

What Does the Legislation and the Court of Cassation Say?

TBK Article 100: A Mandatory Allocation Rule

Article 100 of the Turkish Code of Obligations No. 6098 (corresponding to Article 84 of the repealed Code of Obligations No. 818) sets out a mandatory rule for the allocation of partial payments made by a debtor. Accordingly, if the debtor is in arrears on interest and expenses, the debtor does not have the right to have a partial payment deducted directly from the principal debt.

As expressly emphasized in the Court of Cassation 12th Civil Chamber's decision E. 2016/2165, K. 2016/16812, dated 2016, and the Court of Cassation 8th Civil Chamber's decision E. 2015/255, K. 2017/2262, dated 2017, partial payments made must first be allocated to interest and expenses (ancillary claims), and only the remaining amount, if any, is deducted from the principal claim. Where expert calculations deduct payments directly from the principal and disregard the allocation to interest, this is treated by the courts as a ground for reversal.

A Chronological Calculation Method Is Required

Where there are multiple partial payments, a separate calculation must be made as of each payment date. The method that must be applied is as follows:

1. On each payment date, the amount of interest accrued up to that day must be determined.
2. The payment made must first be allocated to this interest and any expenses.
3. If any amount remains, only then is it deducted from the principal claim.
4. Interest must then run afresh on the remaining principal until the next payment date, and this sequence must be repeated for each payment to arrive at the final balance.

The Court of Cassation 12th Civil Chamber's decision E. 2018/3687, K. 2018/10389, dated 2018, and the Istanbul Regional Court of Appeal 12th Civil Chamber's decision E. 2022/1490, K. 2022/1189, dated 2022, likewise held that it is mandatory to obtain a detailed and reviewable expert report that determines the outstanding balance in this manner as each payment is made.

The Mandatory Nature of the Rule and Its Application by the Court on Its Own Motion

The Court of Cassation 12th Civil Chamber's decision E. 2016/24258, K. 2017/8685, dated 2017, and the Istanbul Regional Court of Appeal 13th Civil Chamber's decision E. 2022/1059, K. 2024/1871, dated 2024, state that where the debtor is in arrears on interest and expenses, the provision of TBK Article 100 is mandatory and must be applied by the court on its own motion (ex officio) — that is, it must be taken into account by the court even if not raised by the parties.

The Istanbul Regional Court of Appeal 43rd Civil Chamber's decision E. 2022/81, K. 2025/717, dated 2025, states that for a partial payment to be deducted from the principal debt under TBK Article 100, the debtor must not be in arrears on interest payments; otherwise the payment is deducted from interest, and the parties may not agree to the contrary of this rule. The Court of Cassation 11th Civil Chamber's decision E. 2013/950, K. 2013/18494, dated 2013, likewise confirmed that a debtor cannot demand that a partial payment be allocated to the principal claim.

Maturity and the Commencement of Default

The specific maturity periods agreed between the parties are decisive for the occurrence of default and the commencement of interest. A maturity provision contained in the agreement (for example, "a certain period from the notification of the invoice") is deemed valid, and upon expiry of that period the debtor is deemed to be in default; interest begins to run from that date.

Points to Watch

• Beware of the "compound interest" (interest on interest) prohibition. If the interest accrued as of a payment date is greater than the payment made, the remaining interest amount may not be added to the principal of the following period. The principal remains fixed, and the unpaid interest continues to await payment as a separate balance.
• A reservation of rights is not required. Even if the creditor has not noted on the receipt that they "reserve their rights regarding interest," this does not eliminate the right to claim interest, because the law itself mandates that the payment be treated as applied to interest.
• Have a detailed, day-by-day account table prepared. In a claim to be submitted to the court or to the other party, preparing a detailed table showing each payment date, the interest accrued up to that date, and the interest/principal breakdown of the payment — rather than simply stating a lump-sum "outstanding balance" figure — directly affects the course of the case.
• Clarify the starting date of the maturity period. Since it can be disputed in practice whether the maturity period is calculated from the "document date" or the "notification/registration date," it is important to clarify this point through the contract or correspondence.

Conclusion: What Should You Do?

TBK Article 100 is a mandatory provision that protects the creditor and prevents the debtor from using partial payments to their own advantage. Where the debtor is in arrears on interest payments, each partial payment made is first deducted from accrued interest and expenses, and only the remaining amount, if any, is deducted from the principal. This rule cannot be varied by agreement between the parties and is applied by the court on its own motion.

If a creditor-debtor relationship involves partial payments, you must have a chronological and detailed calculation carried out based on each payment date in order to correctly determine the outstanding balance. If you are facing such a dispute, we recommend seeking support from a lawyer experienced in this area, and if necessary a financial advisor, to correctly establish your claim or debt.