> ## Documentation Index
> Fetch the complete documentation index at: https://docs.vanna.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Liquidation

> What happens when a margin account's health factor reaches 1.10, and how to avoid it.

A margin account with debt can be liquidated when its health factor is **1.10 or below**. There is no grace period, and anyone can liquidate it; your signature isn't needed.

> [!WARNING]
>
> Health Factor must be strictly above 1.1 for a debt-bearing account to be healthy. Liquidation eligibility also depends on oracle and execution checks; displayed snapshots can lag current state.

## What happens

**1. A liquidator repays all your debt**

The liquidator pays every loan in full, from their own tokens, back to the Vanna pools.

**2. Your Farm positions go to the liquidator**

Blend supply is withdrawn straight to the liquidator, and Soroswap / Aquarius LP tokens are transferred to them.

**3. Your remaining tokens go to the liquidator**

Every token left in the margin account is swept to the liquidator.

> [!WARNING]
>
> **Liquidation takes all remaining collateral**, not just the debt plus a bonus. Nothing above the debt comes back to you. The account itself stays open (empty, with no debt) and can be used again.

## How to avoid it

> **[Watch the buffer](https://docs.vanna.finance/stellar/guides/margin/health-factor.md)**
>
> The Liquidation card shows how many dollars you can lose before 1.10. Keep it large.

> **[Repay or add collateral](https://docs.vanna.finance/stellar/guides/margin/repay.md)**
>
> Repaying debt or depositing more both raise the health factor straight away.

* Remember that **interest** keeps adding to your debt, and a stablecoin loan against XLM loses health when XLM falls.
* **Farm positions can't repay a loan directly.** Exit them first, which takes extra transactions; don't leave it to the last minute.
* **Analytics → Liquidations** shows accounts that can be liquidated now and how close others are.

## Settling an account yourself

Separately from liquidation, the contract offers owner-authorized **settlement**: it unwinds Farm positions into the margin account and repays debt from its balances. What's left stays in the account until you withdraw it.

> [!WARNING]
>
> At or below a Health Factor of 1.1, a priced account with debt is a liquidation candidate. The current liquidation path transfers remaining collateral to the liquidator; it does not automatically close the SmartAccount.

See [Health Factor](https://docs.vanna.finance/stellar/guides/margin/health-factor.md) and the [technical liquidation page](https://docs.vanna.finance/stellar/learn/liquidation.md).


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.