Forced Liquidation Definition

Forced, or involuntary, liquidation is the process of having one’s assets forcibly liquidated, or sold, during a chapter 7 bankruptcy proceeding. Typically, assets will be surrendered or seized and then liquidated by a court-approved process. The proceeds of the forced liquidation are used to pay off creditors. Funds remaining after all debts are satisfied (a rare occurrence) are returned to the person filing bankruptcy.