Great tutorial: SFTP only chroot users with OpenSSH in Debian [saved]
Troubleshooting
Permissions setting
Important note in the tutorial above: "Folders in the path along the way must be owned by root:root and must not be writable by anyone but root."
So 755 mode is the best choice for the user's root folder and all its parents above.
Debugging
Client: sftp -v username@host (parameter v activates the verbose mode)
Server - users login history: /var/log/authlog