Debtor Defense - Wolfenson Lawyers

Defense to Debtors and Seizure of Assets

Wolfenson Lawyers provides its clients with expert legal advice in the event of late payment of their debts or financial insolvency.

We advise our clients in the moments in which they have become unable to support their financial obligations towards companies and / or individuals. The assessment of the study involves a strategic defense plan, which includes from the verification of a possible prescription of the debt, to the negotiation with the creditors of our clients; as well as the preparation of its judicial defense with respect to an eventual seizure of property through third parties of domain or possession. Likewise, we advise our clients on the alternatives and benefits provided by the Insolvency and Re-entrepreneurship Law, using the tools provided by Law 20,720 and the Superintendency of Insolvency and Re-entrepreneurship to seek a new beginning for their personal, family or corporate economy.

We provide comprehensive and personalized advice, focused on providing effective solutions for our clients.

Here is a legal guide to provide you with legal guidance on defense against embargoes in Chile:

What is the embargo of goods?

The seizure of assets corresponds to that diligence where a judicial receiver enters the defendant's domicile and proceeds to take note of the seizable assets that are in it, after said diligence he leaves the place with the written list of sufficient assets. It is important to point out that, as a general rule, there is no removal of assets during the embargo but they remain in the possession of the defendant and with civil and criminal liability for not disposing of them (donating or selling them) during the trial.

Why is the judicial embargo taking place?

The embargo is caused by the non-payment of the debts that a natural or legal person has. Usually, companies tend to initiate judicial collection 90 days after the debts have not been settled, but this is not always the case, there are debts that are not collected judicially for several years, for which the prescription can operate, which should always be alleged by one of our lawyers.

When does the receiver seize assets?

This generally occurs, although it varies according to the case in question, 30 days after notification of the demand to the debtor's domicile. Therefore, it is essential to contact one of our expert lawyers to provide you with adequate and personalized legal advice for your situation.

Can I oppose the seizure of the goods?

Yes, it is possible to oppose the embargo . It is possible to deny entry to the judicial receiver , which is sometimes recommended in order to create time for the preparation of an adequate defense . After said refusal, the judge will order the recipient to go again to carry out the act of the embargo but now accompanied by the police (police) . On this occasion it is no longer possible to oppose (physically but not legally) the embargo.

What assets can be liens?

In general, all the debtor's assets, real estate or real estate, personal property such as automobiles, living room furniture, technological articles, computers, among others , can be seized . The law establishes a list of goods that cannot be seized , these are the following:

1) Art. 1618 of the Civil Code:

They are not embargoable:

1. Two thirds of the salary of employees in public service , provided that they do not exceed ninety hundredths of a shield; if they exceed, two thirds of this amount will not be seizable, nor half of the excess.
2. The same rule applies to the montepíos, to all the remunerative pensions of the state , and to the forced alimony;
3. The bed of the debtor, that of his spouse, those of the children who live with him and at his expense, and the necessary clothing for the shelter of all these people;
4. The books related to the profession of the debtor up to the value of twenty hundredth of shield and at the choice of the debtor himself;
5. The machines and instruments used by the debtor for the teaching of some science or art up to said value and subject to the same choice;
6. The uniforms and equipment of the military, according to their weapon and grade;
7. The utensils of the artisan debtor or farm worker, necessary for their individual work;
8. Food and fuel items that exist in the debtor's possession, until the necessary amount for the family's consumption for one month;
9. The property of the objects that the debtor owns fiduciaryly;
10. Rights whose exercise is entirely personal, such as those of use and habitation;
11. Real estate donated or bequeathed with the expression of non-embargoable, provided that its value has been recorded at the time of delivery by judicially approved appraisal ; but they can be seized for the additional value that they later acquire ”

2) Article 445 of the Code of Civil Procedure:

"They are not embargoable:

1. Salaries , bonuses and pensions of grace, retirement, retirement and montepío paid by the State and the Municipalities.

However, in the case of debts arising from judicially decreed maintenance pensions , up to fifty percent of the benefits received by the obligor may be seized pursuant to the preceding paragraph;

2. The remuneration of employees and workers in the manner determined by articles 40 and 153 of the Labor Code;
3. Forced alimony;
4. The periodic income that the debtor collects from a foundation or that he owes to the liberality of a third party, insofar as these incomes are absolutely necessary to support the life of the debtor, his spouse and the children who live with him already your expenses;
5. The funds that enjoy this benefit, in accordance with the Organic Law of the Banco del Estado de Chile and under the conditions that it determines;
6. Life and sums insurance policies that the insurer pays in compliance with what is agreed upon in them.

But, in the latter case, the value of the premiums paid by the person who took the policy will be attachable;

7. The amounts paid to the public works employers during the execution of the works. This provision shall have no effect with respect to what is owed to the architects or workers for their unpaid wages and the credits of the suppliers due to the materials or other articles supplied for the construction of said works;
8. The real estate that the debtor occupies with his family, provided that he does not have a tax assessment of more than fifty monthly tax units or that it is an emergency dwelling, and its extensions, as referred to in article 5 of the decree law No. 2,552 of 1979; the bedroom, dining room and kitchen furniture for family use and the necessary clothing for the shelter of the debtor, his spouse and the children who live at his expense.

The non-seizure established in the preceding paragraph shall not govern for real estate with respect to the lawsuits in which the Treasury , the Pension Funds and other organisms governed by the law of the Ministry of Housing and Urban Development are part;

9. The books related to the debtor's profession up to the value of fifty monthly tax units and at the choice of the debtor himself;
10. The machines and instruments used by the debtor for the teaching of some science or art, up to said value and subject to the same choice;
11. The uniforms and equipment of the military, according to their weapon and grade;
12. The essential objects for the personal exercise of the art or trade of the artists, craftsmen and factory workers; and the implements, work animals and cultivation material necessary for the farmer or field worker for agricultural exploitation, up to the sum of fifty monthly tax units and at the choice of the same debtor;
13. The household and kitchen utensils, and the food and fuel items that exist in the debtor's possession, until the necessary amount for the consumption of the family for one month;
14. The property of the objects that the debtor owns fiduciaryly;
15. Rights whose exercise is entirely personal, such as those of use and habitation;
16. The real estate donated or bequeathed with the expression of non-embargoable , provided that its value has been recorded at the time of delivery by judicially approved appraisal; but they may be seized for the additional value that they later acquire;
17. Goods destined for a service that cannot be paralyzed without prejudice to traffic or public hygiene , such as railways, drinking water companies or city drains, etc .; but the liquid income that they produce may be seized, observing in this case the provisions of the previous article; and
18. Other assets that special laws prohibit seizing.

Is the salary attachable?

The salary of a person is embargoable , however only with respect to those who exceed 56 UF. Any amount that exceeds that may be seized by the debtor.

Do all debts allow creditors to request the seizure of property?

Yes, all debts allow seizure of assets in case of non-payment of these. Without prejudice to this, the embargo will proceed only with respect to assets whose value is comparable to the debts that are held. In other words, in the case of a debt of three hundred thousand pesos, it will not be possible to seize a property since the value of the property is well above the debt and the movable property within it could satisfy what is owed. However, in the case of a higher debt, of 10 million pesos for example, the property could be seized since it would no longer be so clear that the sale of the movable property could satisfy the debt. You will always require the legal advice of a Wolfenson attorney to rule out the seizure of assets that are not proportionally related to existing debts.

Is it possible to stop a judicial embargo?

There are several alternatives to delay and even stop a judicial embargo , for this you must have the legal advice of a qualified lawyer . In general, there are four alternatives to stop the embargo:

1.- Paying the debt: It is possible to pay the debt at all times and even before the auction of the goods.

2.- Renegotiating with the creditor: That is, reaching a payment agreement and generating a new debt in the future.

3.- Exceptions to the origin of the lawsuit: Corresponds to defenses by a lawyer to delay the processing of the trial . Discouraging its continuation.

4.- Third Party Interposition: Which are actions aimed at establishing that the seized assets are part of the assets of a person other than the debtor, resulting in the impossibility of seizing said assets. There are four types of third parties , domain, possession, payment and priority.

What types of third parties are there?

Third party domain: Intervention by a third party, claiming the right of ownership (owning the thing) over the seized assets (must be proven in court).
Third party possession: Intervention by a third party, claiming the right of possession over the seized assets (it is the most common).
Third party payment: Intervention of a third party, claiming the right to concur in the payment with the performer in the absence of other assets of the debtor (having to prove his preference and the lack of other assets of the debtor where to collect his credit).
Third party priority: Intervention by a third party, claiming the right to be paid preferably to the performer.

What types of third parties can avoid a judicial embargo?

The embargo can be avoided by means of two types of third parties , the third party domain and the third party possession.

The third party domain, is one where a third party claims that the owner of said property is not the debtor but that one. To prove it, any means capable of attesting is generally used, such as certificates of domain with respect to real estate or automobiles, tickets or purchase invoices, among others.

The third party possession is one where a third party claims in court to be the true owner of said assets , that third party can be proven by two witnesses who testify that certain assets are in the possession of a third party and not the debtor.

What happens if the assets do not satisfy the debt?

During the trial, the garnishment could be extended to more assets if the debt is not satisfied , however, if all the debtor's assets are auctioned, the embargo will cease. Eventually, when the debtor acquires new assets , his creditors could try a new embargo but it is rare in legal practice.

Wolfenson Abogados legally advises its clients in defense processes against seizures and judicial collection of debts.

Links of interest about the Legal Advice before the Embargo in Chile :

1.- Civil Code

2.- Code of Civil Procedure

3.- Santiago Real Estate Conservator

Wolfenson Lawyers. Chile Law Firm.

If you need more information and legal advice on the legal defense before the asset seizure procedure, we invite you to contact our lawyers in Santiago. We are located at Avenida Apoquindo 2930 in the commune of Las Condes, Santiago de Chile.

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