when an individual declares bankruptcy their obligations will also be paid off in a specified order for example alimony and child support are among the items at the top of the list 3 the person s senior debts would be paid off ahead of any junior or subordinated debts 
individuals most often encounter the concept of subordination and subordination agreements with mortgages suppose a person has both an original mortgage and a home equity line of credit heloc on the same property both lenders will have liens on the home but the mortgage will have the first lien and first claim on the collateral because it came first the heloc lender will have a second lien putting it in a subordinate position in the event of a foreclosure the mortgage lender would be paid back first now suppose the homeowner decides to take out a new mortgage to refinance the old one when the old mortgage is paid off the heloc would normally move up into the first lien position because it is now the older debt however the lender of the new mortgage may not agree to those terms and instead insist that the heloc lender accept a subordination agreement the heloc lender may do so in return for a fee as is most likely outlined in the terms of its contract with the homeowner it also has the option to refuse in which case the deal may fall through 