Defences against CAE collection: what the courts have accepted and what they have rejected

Quick answer: not all defences against collection of the CAE, the Chilean state guaranteed student loan, are worth the same, and it is worth knowing which ones have succeeded. It has worked to challenge the use of the tax collection procedure for this debt: the Court of Appeal of La Serena set aside an enforcement action and a garnishment by the Treasury on 28 July 2026. It has worked to oppose offsetting against employment severance payments. It has worked to plead limitation when the party collecting is the bank in its own name. It has not worked to attack the withholding of the tax refund, nor to plead limitation when the party collecting is the Fisco, the Chilean State.

This guide separates one thing from the other, because the difference between a defence that succeeds and one that does not is usually a matter of deadlines and framing, not of substance.

First: identify who is collecting and through which route

Every other question depends on this one. There are three scenarios, and they do not share the same defences.

The scenario changes when the Fisco pays the guarantee to the bank and is subrogated into its rights. How that subrogation works, and why both the creditor and the collection rules change from that point on, is explained in the guide to garnishment for CAE debt, which is worth reading alongside this one.

The defence that is succeeding: the wrong procedure

During 2026 the Treasury began collecting the CAE using the collection procedure under the Tax Code, which is administrative, fast, and in which it conducts the enforcement itself.

The Court of Appeal of La Serena ruled on 28 July 2026 that this is not permitted, and set aside the enforcement action and the garnishment. The grounds, which are the ones to reproduce in your own case, were:

• CAE debt is not tax in nature. It is civil, commercial and educational in origin.
• Law 20.027 regulates its own collection mechanisms, such as withholding tax refunds and payroll deductions. Since special rules already exist, a tax procedure cannot be extended to it by analogy.
• The Treasury ended up acting as both creditor and adjudicator at the same time, affecting due process and equality before the law.

The detail that makes people lose this defence. The deadline. A constitutional protection action must be filed within a short period counted from when the act becomes known, and in more than one case the argument was sound and was rejected as out of time. When the notice arrives, the date is the first thing to write down.

The debate is still open, including at the Constitutional Court, where challenges on this same point have been filed. That it is not settled does not mean it is useless: it means it has to be raised properly and on time.

Limitation: when it applies and when it does not

The second paragraph of article 13 of law 20.027 states that unpaid instalments will not become time barred, and that the State must collect them until the debt is extinguished in full.

The Supreme Court has clarified that this is a highly exceptional rule that benefits only the Fisco. When the creditor bringing the claim is a private bank acting in its own name, it cannot rely on it, and the general limitation regime applies. On that basis, limitation defences raised by debtors have been upheld.

That is why the first thing to check in the file is who is appearing as claimant and under what instrument. It is not a formality: it is the defence.

It is worth not confusing this regime with that of other debts owed to the Fisco. Property tax, for example, has its own limitation periods and its own grounds for interruption, explained in the guide to limitation of property tax. The CAE regime is different, because law 20.027 expressly excludes limitation when the State is collecting, so it is not a regime that can be carried over from one tax to another.

What has withstood challenges

• Withholding the annual tax refund. This is set out in law 20.027 itself and has been repeatedly upheld. Attacking it head on rarely leads anywhere.
• Non expiry when the Fisco is collecting. It is express statutory text.
• Exclusion from credit registers. This is not a defence, it is a disclosure rule: the debt does not appear in the bulletins but remains enforceable.

What has protected the debtor

• Wages. These cannot be attached except for the part exceeding 56 unidades de fomento, and the full list of what is protected is in the guide to unattachable assets.
• Employment severance payments. There are Supreme Court rulings that have refused to offset CAE debts against severance payments, on the basis that law 20.027 has its own regime that displaces the general rules on offsetting.
• The procedure. This is what was covered above, and today it is the most productive route.

And what does not protect you. The family home. The unattachability rule in article 445 number 8 of the Code of Civil Procedure does not apply in proceedings where the Fisco is a party, which is exactly the case after subrogation. This is explained in the guide to garnishment for CAE debt.

Documents you need to gather before deciding on a defence

Before deciding which defence to raise, and above all before ruling one out as weak, it is worth having the following on hand:

• The notice you received, with its exact date. Deadlines run from there, and they are deadlines that cannot be recovered once missed.
• The complete case file, including the instrument on which the claim is based. A bank instrument is not the same as a state one.
• The subrogation documentation, if the claimant is the Fisco. This shows when and how it paid the guarantee and became the creditor.
• Your latest payslips, if what is at stake is a deduction or garnishment of wages, because they are the evidence that they fall within the limits explained in the guide to unattachable assets.
• Any prior settlement agreement or communication you signed with the bank or the Treasury, because it can affect what is still available to argue.

What to ask the party collecting

Before responding to any payment demand, there are specific questions worth having answered, because the answer determines which defence applies:

• In what capacity is the party collecting acting? The bank in its own name, or the Fisco once subrogated. The answer determines whether limitation is available.
• What is the instrument on which the claim is based? And where relevant, the date and amount of the subrogation.
• What procedure is being used? Ordinary civil enforcement proceedings, or administrative collection through the tax procedure. This is the question that carries the most weight today.
• What assets are they seeking to attach, or have they already attached? And if a property is involved, it is worth checking its registry status with a title study before taking any action.

Mistakes that cause a good defence to be lost

• Letting the deadline for the protection action run out. This is the most common mistake in the defence that is producing the most results today, and it is lost by failing to note the date of notice.
• Signing a settlement agreement before reviewing the file. A settlement agreement is an acknowledgement of debt and can close off arguments that were available, including the one about the procedure used to collect.
• Confusing the bank with the Fisco when pleading limitation. This is exactly the distinction the Supreme Court has stressed, and getting it wrong loses a defence that did have grounds.
• Acting on the notice alone, without requesting the complete file. Without the instrument and the subrogation documentation, it is not possible to properly assess which defence applies.

What to do when the notice arrives

• Write down the date. All the relevant deadlines run from that point, and they are short.
• Identify the claimant and the procedure. Bank or Fisco, civil enforcement or tax collection.
• Request the complete file, including the instrument on which the claim is based and the subrogation documentation.
• Check what was attached and whether it corresponds to protected assets.
• Do not sign settlement agreements before that review, because an acknowledgement closes off arguments.

Frequently asked questions

Does a protection action work against CAE collection?

It works when what is being challenged is the procedure used, not the existence of the debt. That is the difference between an action that succeeds and one that is dismissed: the court will not decide whether you owe the money, but whether the Treasury could collect it that way.

I have already been garnished. Have I left it too late?

It depends on the stage and the procedure. Even with a garnishment already in place, there are arguments available, both about the assets affected and about the route used. What is lost for good are deadlines that have already expired, which is why it is worth reviewing the file as soon as possible.

Can I argue that I was not properly notified?

It is a common argument and sometimes a decisive one, especially in administrative collections. It requires checking how the notice was served and at what address, which is part of what you request with the file.

Is the debt extinguished if I file for insolvency?

The treatment of the CAE in insolvency proceedings has been the subject of debate and case law, and it is not equivalent to that of an ordinary debt. It is a route that has to be assessed against the specific case, not treated as an automatic solution.

Money was deducted from my payslip. Can I complain?

Wages cannot be attached within the legal limits, so a deduction outside those limits can be challenged. Keep your payslips, they are the evidence.

Is it worth waiting for a debt forgiveness law?

As of this update, there is no debt forgiveness in force. Waiting while defence deadlines run out is the worst possible combination: you lose what was actually available for the sake of something that does not yet exist.

What if I just pay?

It is a legitimate option and sometimes the best one, especially if a settlement agreement includes forgiveness of interest. What we recommend is checking the amount and the procedure first, because we have seen claims brought through questionable procedures and amounts that did not match what was actually owed.

I already signed a settlement agreement without reviewing it first. Have I lost everything?

Not necessarily, but your position is more limited. A settlement agreement already signed involves an acknowledgement of the debt, and that closes off some arguments, though not all of them. It is worth reviewing the exact terms of what was signed and the date it was signed, because that determines what is still open and what is not.

How we work on it

We start with the file: who is bringing the claim, under what instrument, through what procedure and with what dates. That review does not take long, and it determines whether a procedural defence is available, which today is the most productive route.

We then check what was attached and whether it corresponds to protected assets, and where appropriate we request its release without that meaning we give up arguing the merits.

If a property is involved, we also review its registry status with a title study, because a poorly identified garnishment or a property with pre existing problems changes the picture.

The litigation side is handled by our litigation team. Send us the notice and the file if you have it, and we will tell you which defence applies and how many days you have left to raise it.