# Liquidation A liquidation is a process that occurs when a borrower's **Health Factor** is reduced to 1 or lower due to their collateral value not properly covering their loan/debt value. This might happen when the collateralized asset value decreases or the borrowed asset value increases. Liquidation is determined by factors related to the collateral used to secure borrowed assets, which are used to calculate the initial borrowing capacity. ([Collaterals and Reserves](/protocol/collaterals-and-reserves.md)) When the outstanding borrowed amount in an account surpasses the predefined limits set by these collateral factors, that account becomes eligible for liquidation. Liquidation can be initiated by a liquidator, which can be a bot, smart contract, or individual user. This process involves invoking the "absorb" function, which transfers control of the account's collateral to the liquidator and returns the collateral's value to the user, minus a penalty known as the liquidation factor, in the form of the base asset. In a liquidation, up to 50% of the borrowing debt is repaid and that value plus the liquidation fee is taken from the collateral available. After a liquidation, that amount liquidated from your debt is repaid. Each absorption is paid for by the protocol’s reserves of the base asset. In return, the protocol receives the collateral assets. If the remaining reserves are less than the target, liquidators are able to buy the collateral at a discount using the base asset, which increases the protocol’s base asset reserves. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.lumen.money/protocol/liquidation.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.