Yet, destroying all the items is worse. What other options does one have? I mean, yes there is a perverse incentive, but that's more for cash forfeiture without a crime, which is a real thing too in the US..

Generally auctions are considered the least-unfair way of disposing of property. Outside of forfeiture or lost property, in some causes a court can force shared-ownership property to be auctioned, to give it a "fresh start" without the problematic shared ownership. This also happens with hundreds-of-millions-of-dollar real estate.