Liquidation is a process that occurs when people file for chapter 7 bankruptcy. During the liquidation process, creditors gain possession of people’s assets and try to sell the assets for a profit. The profit is then used to repay debt that people owe to their creditors.
Property that can be liquidated may include: homes, vacation homes, land, vehicles, boats and other types of valuable material assets. In order to avoid the liquidation process, people can file for chapter 13 bankruptcy or try to prevent liquidation by working with a bankruptcy attorney.