Renegotiate or liquidate: which path applies when the debts can no longer be paid?

Chilean law provides two distinct procedures for over-indebted individuals: an administrative one before the Superintendency and a judicial one. Most inquiries start with how to file, when the useful question comes first: which of the two applies to this case? This guide explains how to tell them apart, what changes when a lawyer handles the filing, and includes a self-assessment tool to place your own case.

Between January and June 2026, 8,047 insolvency proceedings were filed in Chile. Of those, 47.4% were personal renegotiations and 47.1% were liquidations of personal assets: two almost identical halves.

That balance says something useful. There is no single answer for debts that can no longer be paid. There are two paths, they serve different purposes, and the first thing to settle is which of the two is yours.

What does each one do?

Law No. 20,720 (Ley N° 20.720), as amended in 2023 by Law No. 21,563 (Ley N° 21.563), provides for both.

Renegotiation seeks an agreement so that you keep paying, but on terms you can actually meet: lower installments, longer terms, a lower rate, grace periods. None of that relief is automatic: it depends on the proposal creditors approve at the hearing. It is an administrative procedure before the Superintendency of Insolvency and Re-entrepreneurship (Superir), free of charge, handled online with ClaveÚnica, and it does not require a lawyer: you can file it yourself or have the filing handled for you. The Superintendency offers guidance throughout and has an office in Temuco.

Liquidation starts from the opposite premise: that no payment arrangement is possible. And it is no mere wiping of debts: the entire estate is declared, non-protected assets are handed over to the liquidator and sold, claims are verified, and creditors are paid as far as the proceeds go. The balances left unpaid are extinguished by operation of law once the closing resolution becomes final, under Article 255, subject to the exceptions the law itself sets out. It is a lawsuit, and representation by a lawyer is mandatory.

The difference is not one of difficulty or cost. It is one of purpose. One reorders the debt; the other closes it out.

Which case is yours?

In practice, situations cluster into three recognizable profiles.

Profile 1: renegotiation is the path, and you can run it yourself

It looks like this: a salaried employee, an independent worker on fees or a pensioner; consumer debts or credit cards with several lenders; stable income that could support a smaller installment; no guarantors or co-debtors on the hook; no real estate; no lawsuits underway.

If that is your case, the administrative route is open to you and the filing costs nothing: 97% of renegotiation hearings end in agreement. You can file it yourself with the Superintendency’s guidance, or have us handle the whole filing if you would rather not do it alone. What each option changes is set out further down.

The requirements set by Article 260 are these:

• Two or more obligations more than 90 calendar days past due, currently enforceable and arising from diverse obligations. The law does not demand that they come from entirely different categories: it is enough that they are distinct obligations.
• A combined total above 80 UF (Unidades de Fomento, Chile’s inflation-indexed unit). Convert to pesos the same day you run the numbers, because the UF adjusts daily.
• Qualifying as a consumer debtor rather than a business debtor: the law treats as a business anyone who was a first-category taxpayer in the previous 24 months, a test the Superintendency applies as first-category activity linked to the provision of services over that period.
• No notice of a simplified-liquidation petition, which is the one that closes off admissibility. The petition also includes a sworn statement that no other enforcement suit has been served on you, unless it is labor-related.

If you issue fee invoices (boletas de honorarios), this changed in 2023. Law No. 21,563 (Ley N° 21.563) redefined who qualifies as a consumer debtor. Since then, independent workers on fees have access to the free renegotiation procedure. They used to fall under the business-debtor track, longer and more expensive. Some websites still publish the old rule.

Profile 2: liquidation is the path, and by law it takes a lawyer

You recognize it when the total debt no longer bears any relation to income. Not when the installment is uncomfortable, but when no viable installment exists: when any realistic proposal would take decades, or when servicing the debt consumes practically the entire income.

Here renegotiation does not solve anything. It binds the person to an agreement they will probably not be able to keep, and that agreement can be amended only once, provided at least 50% of the declared obligations stem from the original agreement, under Article 272 A. Once the petition is declared admissible, moreover, no new renegotiation can be requested for five years from the publication of the admissibility resolution, under Article 270.

There is something else worth knowing before entering a renegotiation unexamined: if the enforcement hearing produces no agreement, or there are no assets to offer at it, the Superintendency refers the case to the courts and a liquidation begins. It is not that the renegotiation “did not work out”. It is that it ends in the other procedure. And since there is no withdrawing once the petition is declared admissible, there is no turning back either.

The 2023 reform created the simplified liquidation, which cut timelines and costs: it replaced the seizure of assets with a hand-over to the liquidator, did away with creditors’ meetings unless creditors holding 25% of the liabilities request them, and allowed movable assets to be sold through online platforms without an auctioneer. It can be used once every five years.

Those who cannot afford representation can request it from the Legal Assistance Corporation (Corporación de Asistencia Judicial), subject to its means test.

Profile 3: review first, then choose

It is the most common profile, and the one the platform cannot resolve, because the questions that determine the outcome are not on the form.

Four questions to answer first

Did someone sign for you?

Article 255 provides that the discharge of unpaid balances does not affect creditors’ rights against sureties, joint or subsidiary co-debtors, guarantors and third parties who granted security over their assets, and that whoever pays in the debtor’s place cannot claim reimbursement from them. The case law, however, is not uniform: the Supreme Court has characterized the discharge as strictly personal to the debtor, in Rol N° 36.509-2021, while the Santiago Court of Appeals has held in another case that the extinction of the main obligation reached the guarantor as well, in Rol N° 6.996-2022. They are neither always bound nor always released: each guarantee gets reviewed against its own instrument. What does not change is the bottom line: if someone signed for you, the decision stops being individual and becomes a family one.

Is there a CAE student loan in the mix?

The state-backed student loan (CAE) is governed by Law No. 20,027 (Ley N° 20.027), which has rules of its own: it allows payments to be temporarily suspended in case of unemployment, and it provides that unpaid installments do not lapse by limitation, with the State bound to collect them until the debt is fully paid. On whether a liquidation wipes it out, the Supreme Court has ruled both ways: in Rol N° 10.927-2022 it excluded a state-guaranteed loan from a voluntary liquidation, on the precedence Article 8 of Law No. 20,720 (Ley N° 20.720) gives to special statutes, and in Rol N° 141.426-2023 it held that such an exclusion does not apply generally to every case. In practice, the outcome can turn on the court, the timing of the procedure, how the loan was reported and whether the creditor appeared. It is not certain that a liquidation will wipe out the CAE, nor that it will leave it standing: if it is a significant share of the total, that question gets studied before choosing the path.

Is there real estate involved?

Here it pays to be blunt, because a lot of ill-founded reassurance circulates. The seizure protection for the home the debtor occupies with their family, under Article 445 of the Code of Civil Procedure (Código de Procedimiento Civil), requires a fiscal assessed value no higher than 50 UTM, does not apply in cases where the Treasury is a party, and does not prevent foreclosure of the mortgage over that same home: a good share of homes falls outside the shield. Nor should the fiscal assessed value be confused with the market value, which is usually higher and is the one reported in the procedure: the simplified-liquidation petition requires declaring assets at their market value together with their encumbrances, and also any interests in companies, co-ownerships and inherited estates, under Article 273 A. Marital community property, inherited co-ownership, land under title regularization or a home bought with a state subsidy are situations that call for reviewing title deeds, not filling in a form.

Have you already been sued?

It depends on which lawsuit it is. The only one that closes the renegotiation door by itself is a simplified-liquidation petition already served, but the filing requires swearing that no other non-labor enforcement suit has been served either, so any court collection underway changes the conversation: defenses, deadlines, statutes of limitation, and eventually a voluntary liquidation filed at the right moment.

How renegotiation actually works

Once the petition is filed, the Superintendency has 10 business days to review it, counted in administrative terms. It can declare the petition admissible, order records to be corrected or completed, within the period the resolution itself sets, or reject it.

Once admissibility is declared, and until the procedure ends, Article 264 produces significant effects:

• Creditors may not petition for your liquidation or start enforcement suits or executions of any kind, nor seek evictions in lease proceedings.
• The limitation periods on your obligations are suspended.
• Default interest stops accruing under the contracts in force.
• Contracts keep their validity and payment terms, and no termination or acceleration clauses can be triggered by the start of the procedure; what creditors may suspend are credit lines and overdrafts.

Admissibility sets the board in order, but it erases nothing: whatever is obtained in installments, terms or interest depends on the agreement put to a vote, not on the filing alone.

If you are served with an execution anyway, you can oppose it before the court by producing a certified copy of the admissibility resolution, raised as a defense, appearing personally and without a lawyer.

Then come three hearings, all held remotely, which the Superintendency covers in its FAQ (in Spanish). The liabilities-determination hearing fixes how much is owed to each creditor. The renegotiation hearing puts the payment proposal to a vote. If there is no agreement, the enforcement hearing proposes selling the declared assets, which can be supplemented with a repayment plan of up to 30% of monthly income, over a term of no more than six months. Once that agreement is fulfilled, whatever balances remain uncovered are extinguished by operation of law.

Two practical rules. First: the petition carries a sworn statement listing all obligations, overdue or not, enforceable or not, together with income, assets and their encumbrances, so leaving out a debt because it is current is a classic mistake; besides, debts you do not declare do not get renegotiated, unless the creditor itself asks to be included. Second: Article 260 excludes from the procedure court-ordered child support, divorce compensation awards, obligations arising from civil offenses, and criminal fines and other criminal monetary penalties, which must still be declared so the real burden is transparent.

Once the procedure ends, the Superintendency and the registry keepers must delete, amend or block your records in the Insolvency Bulletin and in the other registries of economic, financial, banking or commercial obligations, within no more than 30 days. This is ordered by Article 6 of Law No. 20,720 (Ley N° 20.720), which refers to Article 6 of Law No. 19,628 (Ley N° 19.628). It is worth understanding its scope: it clears the Insolvency Bulletin and the commercial bulletins, but it does not erase the internal history each bank keeps on its own customers.

What to do this week

Before deciding anything, four steps that bring the picture into focus and that you can take on your own.

Request your Debt Report from the Financial Market Commission (CMF). It is free, online, with ClaveÚnica. Without the real, complete number, any decision is made blind.

Ask each creditor for a certificate of the debt, stating principal, interest and due date. They are legally required to issue it; if they refuse or try to charge for it, that is grounds for a complaint before SERNAC, the consumer protection agency. Keep in mind those certificates are valid for no more than 30 days.

Check whether there are lawsuits against you in the judiciary’s Virtual Judicial Office. That is what determines whether the administrative route is still open.

Put off any refinancing while you evaluate. A refinancing acknowledges the debt, restarts the clock and can alter the eligibility requirements.

What changes when a lawyer handles it

Filing a renegotiation is free and you can do it yourself. Hiring a lawyer does not pay for filling in the form. It pays for the judgment that goes into building the case, and for having someone answer for it if the procedure runs into trouble.

• Which debts get declared, and on what terms. Debts you do not declare do not get renegotiated, and some are worth examining before they go in: filing a time-barred debt can amount to acknowledging an obligation that was no longer enforceable.
• A payment proposal that survives the vote. Creditors vote on the proposal. An installment worked out from what is actually left after living costs stands a better chance of being approved and, above all, of being met: the agreement can be amended only once.
• Representation at the three hearings. They are held remotely, and on the other side are creditors who arrive prepared and with counsel.
• What to do if a lawsuit lands. An enforcement suit served on you changes both the route available and the deadlines. At that point a defense stops being optional.
• In liquidation, representation is mandatory. That is not a commercial preference: the law requires it, and the opening filing defines which assets are declared and how the liabilities are ordered.

At R&V Soluciones Legales we take on the filing of both procedures, in Temuco and remotely across Chile. And if yours is the first profile and you would rather handle it on your own, we will say so just as plainly.

Where to go in La Araucanía

The Superintendency of Insolvency and Re-entrepreneurship serves the region at Claro Solar 835, 14th floor, Torre Campanario building, Temuco, within the offices of the regional economy secretariat (phones 45-2952121 and 45-2952123). In-person appointments are arranged by email with the regional officer.

If your situation matches the first profile and you would rather handle it yourself, that is the place to go and the filing costs nothing.

If it matches the second or the third (guarantors, real estate, a CAE loan, a pending lawsuit, or doubts about whether your capacity to pay is real), it is worth reviewing the file before choosing a path. It is a one-hour conversation that keeps you from committing to the wrong track, and you can book it online.

This article is general in nature and does not constitute legal advice for any specific case. The figures and deadlines cited reflect the legislation, the case law and the official reports of the Superintendency of Insolvency in force at the date of the article’s last revision. If your situation matches the second or third profile, contact us to review your file with our Civil Law team: we tell you which of the two procedures applies, we take on the filing if you want us to, and we also tell you when you can do it without us.