Seizure over CAE debt: why the family home is not protected and what can be done

Quick answer: when a debtor under the CAE, the Chilean state guaranteed student loan, stops paying, the bank calls in the guarantee from the State. The State pays and is subrogated to the bank's rights, and from that point the creditor is the State while the one collecting is the Treasury. That change of creditor has two harsh consequences: article 13 of law 20.027 provides that unpaid instalments do not prescribe when the State is collecting, and article 445 number 8 of the Code of Civil Procedure, which protects the property the debtor occupies with their family, does not apply in proceedings where the State is a party. In other words, the home protection that many people take for granted does not operate in this case.

We wrote this guide because people come to our office who discover the seizure only once it is already registered with the Conservador de Bienes Raíces (the Chilean property registry), and that is the moment they learn all of the above. There was almost always room to act earlier, and almost nobody used it.

How an unpaid instalment leads to a seizure

The moment that matters. Everything that can be negotiated with the bank has to be negotiated before the guarantee is called in. Afterwards you are dealing with someone else, under different rules, with much less room to move. That is why the worst response to the bank's letters is not to reply to them.

What documents to gather before negotiating with the bank

While the debt is still in the bank's hands is when the most options exist, and also when it is worth having the following in order so you are not negotiating blind:

• The CAE loan agreement and its annexes, with the instalments and dates agreed.
• An up to date debt certificate, requested directly from the bank, showing what is overdue and what is still to fall due.
• The payment and arrears history, yours or the bank's, to be clear on when the arrears began.
• The communications received from the bank, letters, emails or notices, with their dates.
• Your payslips, if you are going to look into an income based reduction in the instalment.

With that information to hand, a conversation with the bank stops being a blind negotiation and becomes an informed decision about which alternative to ask for.

Article 13: why this debt is not extinguished by the passage of time

The second paragraph of article 13 of law 20.027 provides that the debtor's unpaid instalments will not prescribe, and that the State must pursue their collection until the debt is extinguished in full.

The Supreme Court has clarified the scope of that rule, and the clarification helps the debtor: it is an extremely exceptional rule that benefits only the State. When it is a private bank collecting in its own name, the non-prescription rule does not apply, and the general regime, with its ordinary time limits, governs instead.

That is why the first question in any defence is: who is collecting? A claim from the bank is not the same as a Treasury collection, and confusing the two loses the one argument that might have worked. This regime is specific to the CAE: other debts owed to the State, such as property tax, have their own limitation periods, explained in our guide to limitation of property tax, and it is not a good idea to carry those rules over from one tax to another.

The home protection that does not protect here

Article 445 number 8 of the Code of Civil Procedure declares that the property the debtor occupies with their family cannot be seized when its fiscal appraisal does not exceed fifty monthly tax units (UTM), along with the family's bedroom, dining room and kitchen furniture and the clothing they need.

And here comes the exception that changes everything. That protection against seizure does not apply in proceedings where the State is a party. Because after subrogation the creditor is the State, the family property is not covered by that rule. It is the gap between what people believe and what the law says.

What remains protected in any case are wages, within the limits of article 57 of the Labour Code, and the household's indispensable everyday items. The detail of what falls in and what falls out is in our guide to assets that cannot be seized. That same fiscal appraisal that sets the fifty monthly tax unit cap is also the basis on which property tax is calculated, so if it looks out of date to you, it is worth checking in parallel through that route.

The open debate in 2026: the tax procedure

During 2026 the Treasury began collecting CAE debts using the collection procedure under the Tax Code, which is administrative and far quicker than an ordinary enforcement action. That is being contested in the courts, with results favourable to debtors.

The Court of Appeal of La Serena, on 28 July 2026, set aside an enforcement action and a seizure brought by the Treasury through that route. Its reasoning was that CAE debt is not tax in nature, that law 20.027 itself regulates its own collection mechanisms, and that a special tax procedure cannot be extended by analogy to an obligation that is not a tax. It added that the Treasury ended up acting at once as creditor and as judge, affecting due process and equality before the law.

The debate is still alive, including before the Constitutional Court. What matters in practical terms is that there is a concrete defence that has succeeded, and that it is lost if it is not raised in time. The available routes and their deadlines are in our guide to defences against CAE collection.

The order in which to act

Facing a seizure that has already been carried out, or the risk that one is coming, the order in which you take action matters:

• If the arrears are recent and the bank is still the one collecting, get in touch and explore alternatives before it calls in the guarantee. This is the stage with the most room to move.
• If subrogation has already happened, request the complete file and work out who is collecting and through which route, as explained in our guide to defences against CAE collection.
• Check the assets actually seized against the list of protected assets, without assuming that the family home is covered.
• Assess the relief tools available, suspension, a payment arrangement or a reduced instalment, but do not sign anything before reviewing the file.
• If there are title problems running in parallel, resolve them together with the defence against collection, not afterwards.

What to do if the property has already been seized

• Request the complete file and work out who is collecting and through which route. Everything else depends on that.
• Watch the dates. The time limits for opposing and for appealing are short and are strict.
• Check your property's certificate of mortgages and liens, to find out what is registered, since when and in whose favour.
• Do not sign payment arrangements without reviewing them first. An arrangement is an acknowledgement of debt and can close off arguments that were otherwise available.
• Check whether the property has other underlying problems, because a seizure on a badly registered property opens up one more front. If an objection from the Conservador comes up, there is a deadline running.

What is actually available today to ease the pressure

Without straying into the territory of promises, these are the tools that the regulations themselves and the Treasury provide for, and that are worth checking before matters reach seizure:

• Suspension for unemployment, with requirements around limited arrears.
• Payment arrangements with the Treasury, with the possibility of interest being waived depending on the case.
• An income based reduction in the instalment, within the system's own mechanisms.
• Exclusion from the commercial registers: CAE debt does not appear in the commercial bulletins, even though it remains perfectly collectible. Not appearing there does not mean it has been extinguished.

Common mistakes at this stage

• Waiting too long to contact the bank. Once the guarantee has been called in, you are dealing with someone else and the alternatives for negotiation shrink.
• Assuming the family home is protected. This is the costliest mistake, because it leads to not mounting a defence in time, relying on a rule that does not apply against the State.
• Signing a payment arrangement without first checking who is collecting. It can close off an argument about the procedure that was the most productive one available.
• Believing that not appearing on Dicom means the debt has been extinguished. That is only a disclosure rule, and the debt keeps accruing interest.

Frequently asked questions

Can they take my house over the CAE?

The protection against seizure of the family home under article 445 number 8 does not apply in proceedings where the State is a party, so the honest answer is that the property is not protected by that rule. That does not mean seizure is inevitable, or that the procedure followed is correct: it means you need to defend yourself instead of relying on a protection that does not apply.

Does CAE debt prescribe?

When the State is collecting, no: article 13 of law 20.027 says so expressly. When a bank is collecting in its own name, the general time limits do apply, and the Supreme Court has accepted that distinction. That is why identifying the creditor is the first step.

My tax refund was withheld. Is that legal?

Withholding the annual refund is provided for in law 20.027 itself and has withstood legal challenges. That is different from seizing a wage or a severance payment, where case law has been considerably more protective of the debtor.

Can they deduct it from my severance pay?

There are Supreme Court rulings that have rejected setting off CAE debt against severance pay, on the basis that law 20.027 has its own regime that excludes the Treasury's general rules on set off. It is a defence that has worked.

If I do not appear on Dicom, has the debt disappeared?

No. Exclusion from the commercial registers is a disclosure rule, not an extinction rule. The debt still exists, keeps accruing interest and remains collectible.

Is it worth signing a payment arrangement with the Treasury?

Sometimes, especially if interest is being waived and your situation allows you to keep up with it. But it is worth reviewing it first, because an arrangement is an acknowledgement and can close off arguments that were still open, including the one about the procedure used to collect.

Is there a debt forgiveness law currently in force?

As of this update there is no general debt forgiveness scheme in force. The announcements and bills circulating are not law, and deciding on the basis that "they are going to forgive it" is what makes people stop defending themselves.

How do you request the suspension for unemployment?

It is a request made to whichever body corresponds to the stage the debt is at, the bank or the Treasury, and it operates under requirements around limited arrears. It is worth assessing before collection moves forward, because once a seizure has been carried out the room for this kind of alternative is smaller.

How we work on this

The first step is identifying who is collecting and through which route, because that is where the available defences and deadlines come from. It is a quick review, and it is the one that most often changes the outcome.

In parallel we review the property's registration status: what is registered, since when, and whether the seizure actually reaches the property or whether there is a problem of identification. That review is a title study and it often turns up things nobody had looked at.

The contentious part, whether opposing the collection or the appeal against the procedure used, is handled by our litigation practice.

Send us the notice you received and the property's rol, its property tax roll number, and we will tell you who is collecting, through which route, what deadlines are running and which defence you should raise.