Chilean Supreme Court allows debt offset for CAE loans

The Supreme Court of Chile has upheld a ruling confirming that the General Treasury of the Republic has the authority to offset student loan debts (CAE) using funds owed to the debtor by the State.

The case involved a professional who had received awards totaling approximately $32 million CLP following successful reports of vacant inheritances in the Los Lagos region. The Treasury used these funds to settle outstanding debts from a state-guaranteed student loan (CAE) contracted between 2009 and 2016.

The debtor challenged the action, arguing that the Treasury had improperly extended its compensation powers. However, the Court confirmed the previous decision by the Court of Appeals of Puerto Montt, rejecting the protection claim and validating the Treasury's ability to perform the offset.