IVA vs Bankruptcy: Which Affects Your Mortgage Chances More?
If you’re weighing up an IVA against bankruptcy, or trying to understand how one you’ve already been through will affect a future mortgage application, it helps to see them side by side. Both are formal routes for dealing with debt you can’t otherwise manage, and both leave a mark on your credit file — but lenders view the details differently.
The Basics, Side by Side
An IVA (Individual Voluntary Arrangement) is a formal agreement with your creditors to repay a portion of your debts over a fixed term — typically five to six years — with the remainder written off at the end. You keep more control throughout the process, and it’s registered on the Insolvency Register during its term and for three months after completion.
Bankruptcy is a formal legal process that typically results in discharge after around 12 months, at which point most restrictions lift. It’s a faster route out of the restricted period than an IVA, but it can involve the sale of assets (including, in some cases, home equity) depending on your circumstances.
How Long Each Affects Your Credit File
This is the one area where they’re identical: both an IVA and a bankruptcy remain on your credit file for six years from the date of registration — for an IVA, that’s when it started; for bankruptcy, that’s the date of the bankruptcy order, not your discharge date. Neither disappears early just because the arrangement finished or you were discharged sooner.
How Specialist Mortgage Lenders View Each
| IVA | Bankruptcy | |
|---|---|---|
| When you can typically apply | Once completed and marked satisfied (some lenders consider active IVAs in final stages) | Generally 1-3 years post-discharge |
| Typical deposit guidance | 15-25% | 15-25%, often reducing over time |
| What lenders look at most | Completion status, payment history during the IVA, time since | Time since discharge, cause of the bankruptcy, credit behaviour since |
In practice, specialist lenders assess both the same underlying way: they look at what happened, how long ago, and what your financial behaviour has looked like since — not simply which label applies. A bankruptcy discharged three years ago with a clean record since is often viewed similarly to an IVA completed three years ago with the same clean record. The specifics matter far more than which route you took.
Which Should You Choose?
If you’re currently deciding between an IVA and bankruptcy, that decision should be made with proper debt advice based on your full financial circumstances — your assets, your income, and what each route actually means for your situation — not primarily on which one might look better to a mortgage lender years from now. Free, independent debt advice from a charity like StepChange or National Debtline is the right place to start that decision.
Already Been Through One? We Can Help With What’s Next
Whether you’ve completed an IVA or been discharged from bankruptcy, the mortgage conversation is the same: what matters is your record since, your deposit, and finding a specialist lender who assesses the full picture. See our full guide to IVA & Bankruptcy Mortgages, or get a free, no-obligation assessment to find out exactly where you stand.