Non-liquid assets are those assets that do not have any monetary value. These are usually only assets like real estate or personal belongings. A good example of a non-liquid asset is a car. Although it may cost you a lot of money to buy a used car, you do not get the value out of it when you want to sell it. Some investments, like a business, are also non-liquid but this is because the value is only realized when it is owned by the business. When the business is no longer in operation, the asset is considered to be destroyed and does not come into play until the time of its reversion back into a form of asset.
When people hear about an asset that cannot be transferred or cashed in, they often think that this means that there is really nothing that you can do with it. This is true in some cases but not in all cases. The assets like cash and securities are assets that can be easily converted into another form of asset like a loan or credit. A non-liquid asset like a stock can also be turned into cash and another type of asset like an insurance policy or permanent life policy can be turned into a non-liquid asset like a policy that pays dividends.
The way to determine what is an asset and what is an obligation is known as paralegal work. Paralegals are people who do legal research and they work under lawyers. One of their main roles is to determine what is a non-liquid asset and what is an asset.
An asset is basically something that a person owns. In legal terms, assets can be categorized into two forms. One is the tangible assets and the other one is the intangible assets.
The first category includes such things as the depreciated capital assets or the depreciated tangible assets. These are the assets that can be liquidated. The other category is the intangible assets. An example of this type of asset is a contract or agreement. The other type of asset is the liability asset.
Liability means anything that a person owns that might become unlivable. This might be due to any number of reasons. One reason might be due to the breach of contract or even the non-payment of debts. Another reason for this type of asset being termed as a liability asset is if a person has a lien on the property of another person and if the person were to die the lien would be terminated. An example of a liability asset is a car.
Other types of assets include the tangible assets, property and other financial instruments. Assets may also be classified according to the manner in which they are used. This is often referred to as the practical test. This is one way of making sure that an asset meets the requirements for it to be included in the list of assets that can be considered liquid.
The other thing that a creditor will want to see is the collateral or assurance that a loan will be able to be paid off. Collateral is any asset that a creditor is prepared to use as part of their lending strategy. What is a non-liquid asset? The answer to that question will be very much different depending on what you mean by the liquidation of the asset.
In most cases the assets that are considered non-liquid are those assets that are easily transferable such as bank notes, stocks and bonds. These assets will always have some value when they are put up for sale so they will usually be safe from liquidation. Other tangible assets are not so easy to transfer and are not as secure against loss. Examples of this type of asset would be a business or piece of machinery.
A creditor will consider an asset to be non-liquid if it is worth less than the amount that it would cost to liquidate it in the event of bankruptcy. How do they arrive at this conclusion? They look at how much it would cost them to take the asset away from you and to then try and sell it for the current value of what it is worth. This is why some businesses are able to continue to trade whilst undergoing bankruptcy proceedings because they are able to offer a lower price for their assets.
Some businesses have been able to use what is a non-liquid asset to protect themselves by restructuring their debts. By doing this they were able to reduce their liabilities significantly but were still able to pay their creditors. The creditors are happy because they are at least getting the money that they deserve. Of course, this method has a number of drawbacks because the business can still fall into serious debt and cannot offer protection against the insolvency of the business.