Jobless and Broke: The Controversial Impact of Debt Seizures by CAE

Once the initial shock wore off, Silva began putting the pieces together. Based on the involved initials and the withheld amount, he suspected the transaction was related to a debt connected to the State-Backed Credit (CAE). After finding testimonies from similar cases online, his suspicions grew stronger. Days later, after directly contacting the Treasury General of the Republic (TGR), he confirmed that his funds had been seized as part of a debt collection process linked to his student loan.

Over $2.6 Million Seized During Unemployment

One notable aspect of Hugo Silva’s case is that, like many testimonies circulating on social media in recent days, he doesn’t match the profile of debtors that authorities initially indicated would be subjected to these measures.

The first wave of seizures was aimed at individuals earning over $5 million monthly. However, Silva states that he has never received a salary near that amount and that both he and his partner were unemployed at the time their funds were seized.

In conversation with El Ciudadano, he explained that his partner has been out of work for nine months and he lost his job three months ago. Moreover, he stated that the money was seized from a checking account without a credit line, where they kept their family savings intended to cushion periods of job instability—a common situation due to their sporadic work in the regions.

According to his account, the seizure affected the total funds available in the account: $2,603,000. He claims these were resources specifically set aside to cope with job scarcity and provide for his family, including their two young children.

But the seizure did not stop there. Days later, Hugo checked a banking account he rarely used and discovered that funds had also been deducted from his line of credit. In total, an additional $71,276 was withdrawn, bringing the total seized amount to $2,674,276.

Concerning the notifications sent by the Treasury General of the Republic, Silva asserts he received the first mass email sent in April this year. However, he notes that a second communication went directly to his spam folder. While he acknowledges seeing the first message, he assumed after hearing statements from authorities pointing to debtors with incomes over $5 million monthly that he was not part of the affected group. He also claims he never received any phone calls or physical notifications related to the process.

Regarding his debt, he reports that it currently amounts to around $11 million. After graduating from university, he paid off the loan for seven years while maintaining stable employment. He estimates that during that time he paid roughly $8 million. However, he questions the lack of available information for debtors regarding the details of their financial obligations. «One knows how much they borrowed and how much they owe, but does not have access to the breakdown of how that debt is constructed,» he states.

As for the consequences of the seizure, Silva admits that he first felt helpless. «It’s hard to understand how a government can have the power to intrude into your personal account without prior notice or a legal process, aside from an email. As a citizen, I see news about bailouts for companies that evade or collude almost every year, which makes me feel not only helpless but also vulnerable,» he declares.

The impact has also affected his daily life. Hugo lives in Linares but had to temporarily relocate to Santiago for work as a ride-share driver due to unemployment. He currently resides with his parents while his partner and children remain in the Maule Region.

He further states that it is only thanks to family support that he has managed to keep up with his mortgage, other financial obligations, and daily expenses.

«It affects me economically, but I have support networks to get by for a while. What troubles me most is the uncertainty about future government measures, like seizing my house. It also worries me to know there are people in much more complex situations than mine: single-parent families or debtors with serious health issues. Those are cases I have come to know as part of the National CAE Debtors Coordinator,» he concludes.

A Measure that Sounded Alarm Bells

The decision by the Treasury General of the Republic (TGR) to initiate seizures against delinquent CAE debtors ignited a new controversy surrounding student loans. In recent days, dozens of individuals have reported their bank accounts being seized or frozen, leaving them without access to part or all of their funds.

These measures, pushed by the Government as part of a strategy to recover unpaid debts, have drawn scrutiny from various sectors. Among them, lawmakers from the Broad Front have sought explanations regarding the criteria used for the seizures and warned about cases where individuals may be left without resources for basic expenses.

From Social Media to Public Discussion

In recent days, both the internet and news sites have been filled with stories from individuals impacted by the measure, reporting that funds have been withheld from their savings, checking, and visible accounts.

In fact, one affected individual was Benjamín “Pollo” Castillo, who revealed on the program Al Borde by Once Stream that the Treasury General of the Republic seized all funds in his bank account due to a debt associated with the CAE.

The influencer shared that he discovered the situation while attempting to make a transfer during a recording, only to find his account balance at zero. Initially, he thought it was a case of theft or hacking, but later confirmed that the transaction was identified as a «judicial seizure.»

During the segment, Castillo mentioned that he ultimately paid more than $20 million related to the State-Backed Credit, a figure he attributed to the cost of his education, the additional time it took him to graduate, and the years of delinquency. He also stated that he was aware of the debt’s existence but claimed he never received any formal warning before the seizure. He even reported that his dollar savings were taken, which finally allowed him to settle his outstanding debt entirely.

Cases like Castillo’s have proliferated on social media, where various CAE debtors have reported seizures that left their accounts empty. This has raised concerns among those with outstanding debts, some of whom have chosen to withdraw their savings from banks to avoid potential seizures.

What the TGR Reported About the Seizures

On April 23, the TGR announced the start of seizures and retention of financial assets from CAE debtors earning over $5 million monthly who, despite being previously notified, did not rectify their situations.

The measures announced by the agency included the seizure of funds from bank accounts, time deposits, mutual funds, and other financial instruments, as well as assets like vehicles or properties.

According to the institution, this first stage encompassed 1,340 cases nationwide. The TGR stated that the collection actions brought in over $20 billion in 2026, while more than 7,500 agreements associated with CAE were regularized in April alone, generating revenues exceeding $8.4 billion. Additionally, debtors with incomes above $5 million made payments totaling over $2.4 billion outside the established agreements.

Beyond Income: Who Is Being Affected

From the National CAE Debtors Coordinator, they assert that the complaints that have surfaced in recent weeks reflect a long-standing issue they have been trying to highlight.

«As the National CAE Debtors Coordinator, our work has primarily focused on bringing to light the reality faced by thousands burdened with educational debt, placing the CAE and its abusive and unjust collections at the center of public debate,» they stated.

Furthermore, they have proposed solutions to address the root problem and are currently coordinating actions with student federations and other social organizations to expose the effects that, in their view, the student financing system has had on thousands of families.

Regarding the situations they have encountered in recent weeks, they indicate that there is a wide array of cases. «From individuals who were seized without prior notification; individuals notified whose seizures are yet to be carried out; cases of people who should not fall within the income brackets supposedly affected by these measures; and even individuals who have not been seized but live with the constant uncertainty of not knowing if they will be next,» they noted.

They also highlighted an issue related to payment agreements offered to debtors. They explain that in many cases, the amounts owed have reached such high levels that the required initial payments and monthly installments are unattainable for a significant portion of affected individuals. Even those who could manage these commitments often have to sacrifice essential expenses to meet them.

«The calculations do not adequately consider the economic reality of families, focusing primarily on the accumulated debt amount that has become excessive due to years of interest and adjustments,» the organization explains.

Adding to this, they state that there is a lack of clarity regarding the debt itself. According to the Coordinator, many individuals do not understand how the amount currently being charged is calculated.

«Balances change constantly, there are interests, adjustments, and various entities involved, but there isn’t a clear and understandable breakdown that allows individuals to reconstruct the complete history of their debt. Even when someone enters a payment agreement, they often discover they are only paying down part of the total, while the remaining balance continues to incur interest and adjustments,» they add.

The organization states that despite the diversity of cases, common elements reoccur among the affected, primarily uncertainty, fear, and a profound sense of helplessness. They even report extreme situations where individuals have expressed suicidal thoughts due to feeling suffocated by debt alongside other financial burdens of daily life.

For this reason, the National CAE Debtors Coordinator advocates for four urgent demands: to halt the seizures, which they believe endanger family survival; to terminate adjustments tied to the UTM; to guarantee greater transparency and traceability regarding the calculation of debts; and to establish payment mechanisms proportional to the real economic capacity of debtors and their households.

Concerning the consequences of seizures or liens, the National CAE Debtors Coordinator warns that the impact goes far beyond the financial aspect. They cite cases where resources not corresponding to salaries have been seized, such as savings or money obtained from selling a vehicle, as well as situations involving independent workers and unemployed individuals whose current income does not reflect their economic reality.

The organization asserts that many affected individuals are already facing tight budgets due to rent, healthcare expenses, dependents’ support, and other debts, meaning a seizure can severely compromise the ability to meet basic needs. They also maintain that the lack of clarity regarding the actual debt amounts and the implications of payment agreements generates frustration, uncertainty, and high stress levels among those trying to regularize their situations.

Moreover, both the National CAE Debtors Coordinator and Foundation SOL contend that the cases emerging now illustrate a more diverse universe than initially reported by the authorities.

Benjamín Sáez, a researcher from Foundation SOL, pointed out that the profiles of affected individuals are diverse and that merely looking at income levels is insufficient to understand the impact of these measures.

He explained that while a significant portion of reported cases involves individuals with monthly incomes near or exceeding $5 million —and even those included in the expanded criteria for incomes close to $3.5 million— there are also accounts of individuals with considerably lower earnings.

«In most cases, the affected individuals present a broad diversity, considering that each belongs to a household with different characteristics. Income information is one element, but it’s also crucial to consider the complexities and composition of those households,» he stated.

In this context, he warned that cases of debtors with monthly incomes of $1.5 million or $2 million have already emerged, highlighting the necessity to analyze these situations not only based on individual income but also on the economic and family burdens each person faces.

Sáez stressed that beyond individual incomes, those who currently hold debts related to the CAE face significant economic pressure. He argued that the discussion should also incorporate the responsibilities of the state and the banking system regarding the functioning of the system.

He stated that education financed through the CAE cannot be viewed as a mere consumer good, as it is not a tangible or transferable asset, but rather an investment in training and human capital that also benefits society as a whole.

He also reminded that the principal creditor for many of these debts is the state itself, following its acquisition of a significant portion of the loans originally granted by banks. For this reason, he questioned the intensity of the collection measures applied to debtors and suggested that the debate should consider the public responsibility in designing the system as well as the conditions under which payments are currently demanded.

«It’s striking the level of economic pressure exercised on households for debt repayment, considering that the banks were assured the restitution of funds and even charged the state inflated prices,» he concluded.

The Economic Impact of Seizures

On another note, Benjamín Sáez from Foundation SOL, warned that the seizures and liens can have significant consequences for households already facing high levels of debt. He explained that in Chile, one in four individuals over 18 carries at least one overdue debt, and over half of households report some form of indebtedness. In this context, they assert that the retention of income can affect the payment of essential expenses such as food, transportation, essential services, and even other financial obligations, increasing the risk of delinquency and economic deterioration for families.

As reflected in Hugo Silva’s case, the seizure of funds can have effects that transcend the individual debtor. For him, the seizure of over $2.6 million meant that he and his family were left without the savings they had accumulated to survive during a period of unemployment affecting both adults in the household.

«The retention of income can have severe consequences for household consumption and the coverage of basic services, food, clothing, and transport, as well as for paying off other debts. Thus, this decision could potentially increase delinquency or create a more severe permanent delinquency situation for households,» Sáez added.

How the Mechanism Works and Why It Generates Controversy

The Treasury General of the Republic asserts that the collection actions applied to CAE debtors are part of the powers granted by law to recover fiscal resources owed to the state. According to the agency, once a credit goes into delinquency and is assumed by the state as guarantor, the debt may be pursued through collection procedures that include seizures and liens on assets and financial assets.

However, the application of these measures has opened a debate that goes beyond the authority to collect. While the Government defends the legality of the procedures and claims there were prior opportunities to regularize debts, debtor organizations and lawmakers have questioned the criteria used for the seizures and warned about cases of individuals who may have been left without the means to cover basic expenses.

The controversy also reached the judicial sphere. Weeks before reports of cases became known, a group of debtors approached the Constitutional Court, arguing that the state was using tax collection mechanisms to pursue a debt that, in their view, is civil in nature. This was supplemented by an offensive led by opposition lawmakers aimed at limiting or reviewing bank account seizures amidst concerns about the impact these measures may have on the income and savings of those affected.

The Government’s Response to Criticism

It is worth noting that the forgiveness of CAE debts was one of the main promises left unfulfilled by the previous government. However, with José Kast assuming office, that possibility has been definitively discarded. Instead of moving toward any relief or debt reduction mechanism, the new administration opted in its early months to intensify collection policies against those with unpaid obligations related to student loans.

With the alarm already raised among CAE debtors and as complaints piled up from individuals claiming their accounts had been entirely emptied —including cases of those who assert they do not meet the established criteria for the measures—the president, José Kast, addressed the controversy during a press briefing in Tocopilla.

In the session, he defended the seizures applied by the TGR and stated that debtors had previously been given opportunities to regularize their situations.

Additionally, regarding the claims from debtors asserting their accounts were left without funds, Kast suggested that each case should be individually reviewed to determine whether people were notified, aware of their debt, or had the opportunity to approach the Treasury to renegotiate it.

He also stated that not paying the CAE reduces the resources available to fund other public policies, including early childhood education, and reiterated that those with debts can continue to access renegotiation opportunities with the state.

On his part, the finance minister, Jorge Quiroz, assured that he would speak with the TGR regarding the claims from CAE debtors who assert they were seized despite having incomes below $3.5 million monthly. Although he defended the government’s collection policy, he acknowledged that those cases would need to be reviewed to evaluate if a different solution should apply.

He highlighted that nearly 30,000 people have already restructured their debts and that fewer than 1,500 have been subject to seizures. Nonetheless, despite the growing reports in recent days, he reiterated that the Executive would maintain its collection strategy and urged debtors to regularize their situations through payment agreements.

From the educational side, Minister María Paz Arzola also defended the seizures applied to CAE debtors, asserting that the measures were preceded by multiple notifications and opportunities to rectify debts.

In an interview with Mesa Central de T13, she asserted that «there were many prior notices» and that those affected also had the chance to access payment agreements before collection actions were initiated.

The Secretary of State attributed part of the current delinquency to the expectations generated over the years regarding a possible forgiveness of the CAE, stating that it encouraged many individuals to cease payments. Additionally, she indicated that the level of accumulated debt makes the financing of the system «unsustainable» and takes away resources that could be allocated to student aid and other public policies.

Regarding the claims of bank accounts being emptied, Arzola maintained that the seizures are primarily directed at debtors with higher income and insisted that those with lower incomes should approach to regularize their situations to avoid such measures. She also emphasized that the state has broader collection powers than private financial institutions and defended the necessity to «enforce the law.»

Beyond the explanations provided by the government and the Treasury General of the Republic, the controversy continues to escalate. While authorities defend seizures as a legitimate tool for recovering public resources, debtor organizations and experts warn that the cases known so far reveal more complex realities than those initially described.

For individuals like Hugo Silva, the discussion extends beyond administrative or legal aspects. With his savings locked away and facing a period of unemployment alongside his partner, he asserts that his primary concern now is uncertainty. A feeling that, according to the National CAE Debtors Coordinator, is shared by hundreds of individuals who fear becoming the next victims of these measures.

El Ciudadano.

La entrada Jobless and Broke: The Controversial Impact of Debt Seizures by CAE se publicó primero en El Ciudadano.