Chile collection profile



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Complexity of collecting debt:

Notable High Very High Severe

Executive summary

  • Although the payment behavior of domestic companies is generally good, standard payment terms are very broad (60 to 90 days).
  • Courts are trustworthy however the system provides no fast track proceedings’, meaning pre-legal action conducted by collection specialists is the most efficient way to obtain payment without incurring legal costs and delays.
  • Debt renegotiation mechanisms aiming at rescuing companies have been put in place but these are never used and liquidation remains the default proceeding when it comes to dealing with insolvent debtors, therefore the chances of collecting unsecured debt through insolvency courts are inexistent.
General Information GENERAL INFORMATION arrow-transparent
Collection Practices COLLECTION PRACTICES arrow-transparent
Court Proceedings Court PROCEEDINGS arrow-transparent
Insolvency Proceedings INSOLVENCY PROCEEDINGS arrow-transparent
General Information 


Days Sales Outstanding (DSO)

Payments in Chile normally take place within 60 to 90 days on average, and delays in obtaining payments are rare as, traditionally, observing payment terms is a cultural requirement. In addition, all payment incidents in Chile are recorded by a data base managed by a private company, and most individuals and corporations try to have a clean record since this data base is consulted for most business transactions regardless of amount. That being said, the international economic crisis has had an impact on companies' cash flows lately, thus impacting payment behaviors.


Late payment interest

Late payment is regulated by law and interest rates (intereses moratorios) are published periodically by the Central Bank. Regulations provide for maximum interest rates, but these remain complex to calculate as different indicators would apply depending on the currency used, the amount due and the payment delays.

Collection costs may be charged to the debtor provided that the parties' contractual agreement provides for such a possibility.

collection practice 


Orchestrated negotiation first

Amicable settlement negotiation prior to conducting formal legal action is not mandatory by law but remains highly advisable in practice. First, although the courts are reliable, the chances of reaching an acceptable compromise in due time are greater than the chances of obtaining a timely court decision because formal legal action in Chile is time-consuming. Second, courts in Chile cannot enter summary judgment or fast-track proceedings', which implies that amicable negotiations are the only way to obtain payment without commencing formal litigation for small and medium cases in which legal costs would be disproportionate. Finally, the courts are in theory required to establish whether the parties have considered settling the dispute through mediation before initiating the evidence phase (this obligation is observed in practice, but the number of cases where the debtor pays are low). Before starting legal proceedings against a debtor, assessment of assets is important as it allows verification as to whether the company is still active and whether recovery chances are at best. In addition, it is essential to be aware of the debtor’s solvency status: if insolvency proceedings have been initiated, it indeed becomes impossible to enforce a debt (see below).

Court Proceeding 


The court system in Chile is divided between the first instance and Appellate Courts, taking geographical localization (the debtor´s address) and subject matters (civil and commercial law, criminal law, etc.) into account. At the highest level, the Supreme Court has jurisdiction on the national scale, but its work may be reinforced by Special Courts (dealing with antitrust matters for example). The rules applicable to business litigation are mainly codified in a Civil Procedures Code (CPC) and a Court Statute Code (Código Orgánico de Tribunales). It should be emphasized that Chilean courts are independent from the executive power and that, although being equipped with a sensible dose of patience is necessary, commencing legal action before the courts is fairly reasonable.

If the amicable phase fails or if the debtor questions the claim, the option of starting legal proceedings remains. A judicial notice must be served to the debtor by a court clerk (Receptore). The respondent must then answer the complaint within fifteen days but, insofar as there is no summary proceeding for default judgments, the creditor will have to prove its allegations entirely despite the debtor's absence. Therefore, legal representation is essential. Chilean courts would then typically render a judgment recognizing a right, ordering a specific performance, or allowing attachment of the debtor's assets. As a general rule, damages in Chile are to be considered broadly but punitive damages cannot be awarded.

insolvency Proceeding 


The Chilean insolvency system is regulated in the Chilean Bankruptcy Act (new insolvency law and re-entrepreneurship)) contained in the Chilean Code of Commerce. As a result, the main purpose of insolvency law is to pay as much as possible of the debts out of liquidation proceedings. It may be noted that a creditor would normally be entitled to receive a refund corresponding to the VAT (i.e. 19%) paid to the debtor when the latter is declared in compulsory liquidation (bankrupt) by the court. However, it is extremely rare for an unsecured creditor to get any (non VAT-related) money back at the end of insolvency proceedings


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> For more information on local collection practices, court proceedings and insolvency read the full Collections Profile


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