Chapter 7 bankruptcy is often implemented by businesses and individuals who cannot make regular payments toward their debts. Regardless of the amounts of debts they owe – and regardless of whether they are solvent or insolvent – Chapter 7 bankruptcy is available to all debtors.

When you file for Chapter 7 bankruptcy, you are essentially choosing to liquidate your debt. That entails converting your property and other assets into cash (or cash equivalents) by offering them for sale on the open market. All proceeds from those sales would go directly toward your creditors.

A bankruptcy auction is an effective way of liquidating your debt, as it reaches the attention of a great number of people who specialize in (or simply enjoy) buying property and real estate for below market value. When it is public, it works just like any other type of auction: Once a stalking horse bidder has set the minimum price for a piece of property that the seller or their representative has deemed acceptable, the real bidders offer increasing amounts until the highest bid is declared the winner.

What Are the Advantages to Holding a Bankruptcy Auction?

A bankruptcy auction isn’t the only way to settle debts, although its distinct advantages make it an attractive option to many debtors. These include:

  • Speed. Arranging sales of private property requires time to find qualified buyers, sharing information with them, accepting offers, and comparing those offers to determine which is best. An auction does away with these steps, as offers are generated as quickly as potential buyers can bid.
  • Competition. Buyers participating in a private sale are not aware of the amounts of other buyers’ offers. An auction operates on the exact opposite principle, thus encouraging buyers to make increasingly higher offers than their competitors.
  • Convenience. Determining attractive yet fair prices is a time-intensive process, and can prove extremely difficult if comparable chattels or real estate have not sold recently. A price that is too low will needlessly destroy the seller’s equity; a price that is too high will deter serious buyers. An auction does away with that difficulty altogether. Once the minimum price is set, the highest offer manifests itself through competitive bidding.

Is a Bankruptcy Auction the Same as a Foreclosure Auction?

Foreclosure auctions and bankruptcy auctions share a similar goal: raising the money required to settle debts. In the case of a foreclosure auction, the proceeds go directly to the bank or mortgage agency. If the proceeds fall short of paying off the debtor’s mortgage, the mortgage holder may still decide to call it even. Alternatively, it may sue the debtor to pay the difference. In contrast, the proceeds from a bankruptcy auction go to the debtor, who in turn pays them to whichever creditors they owe.

In addition to nontaxable property sales in Denver, Colorado Premier Realty & Auction Services specializes in all types of real estate and personal property auctions. Our large network of Colorado real estate agents (including many real estate agents in Denver) is just part of the reason why so many motivated buyers show up to our auctions. If you would like to know more about how we can help you conduct a bankruptcy auction that settles your debts, then we welcome you to contact us today!