Rebuilding your credit after bankruptcy, an IVA or a DRO

Bankruptcy, an individual voluntary arrangement (IVA) and a debt relief order (DRO) each stay on your credit file for six years from the date they begin¹. That is the single most important number for anyone rebuilding credit after a debt solution: the entry does not wait for you to finish the process, and it does not end when you are discharged. Six years after the bankruptcy order, the IVA start date or the DRO approval date, the entry and the debts listed in it are normally removed².

What changes in the meantime is what you are allowed to do, not what lenders can see. While you are bankrupt you cannot borrow more than £500 from any lender without telling them you are bankrupt³, and the same £500 limit applies under a DRO⁴. Once you are discharged, usually 12 months after the bankruptcy order, that restriction ends and there is no legal limit on borrowing³. But the bankruptcy still sits on the file for the rest of the six years, and lenders, insurers and landlords can all see it.

How long bankruptcy, an IVA and a DRO stay on your credit file

All the main insolvency solutions follow the same six-year rule on your credit file. Bankruptcy, DROs, IVAs and protected trust deeds are recorded as insolvencies and are kept for six years from the date they are recorded². For an IVA or bankruptcy the clock starts on the date the arrangement or order begins¹; for a DRO it starts when the order is approved¹⁰.

Two things are worth knowing about how the entry behaves. First, the debts listed in the insolvency stay on the file too, and they will not show as paid or settled during that time. GOV.UK guidance on DROs states this plainly: the DRO stays on your credit file for six years, and so do the debts listed in it¹¹. Second, the six years can run longer. Credit reference agencies normally delete a bankruptcy order six years from the date of the order, unless you have a bankruptcy restrictions order (BRO) or bankruptcy restrictions undertaking (BRU), which lasts longer¹⁰. Those extensions, covered later on this page, can push the entry out to 15 years².

Your details also appear on the Individual Insolvency Register, which is separate from your credit file. For a DRO, your details are held on the register for the 12 months the DRO lasts, plus an extra three months, so 15 months in total¹². The Individual Insolvency Register page explains what that register shows and who can search it.

If an entry is still showing after six years, or is showing the wrong dates, you can ask the credit reference agency to correct it. The page on correcting your credit report sets out how, and how long information stays on your credit file covers the retention rules for every kind of entry.

Borrowing while bankrupt or under a DRO: the £500 disclosure limit

The rule is simple to state: while you are bankrupt, you cannot borrow more than £500 from any lender without telling them you are bankrupt³. The same limit applies to credit taken out under a DRO, where taking out credit over £500 without telling the lender about the DRO is not allowed⁴. The limit is per lender, and it applies for the whole time you are bankrupt, until discharge³.

Borrowing more than £500 from a creditor without telling them you are bankrupt is a bankruptcy offence¹⁴. That matters beyond the immediate offence: behaviour during bankruptcy is one of the things an official receiver looks at when deciding whether restrictions should be extended, and extensions can last up to 15 years⁸.

Scotland works differently. If you want to borrow £2,000 or more while bankrupt in Scotland, you must tell the lender that you are bankrupt, and if you do not tell them, you are committing a criminal offence⁹. The same £2,000 threshold applies to sequestration more generally, including where you borrow with someone else¹⁵.

The limit ends on discharge. After 12 months, when most people are discharged, you can borrow more than £500 without having to tell the lender about your bankruptcy⁵. There is no legal limit on borrowing after bankruptcy³. What limits you instead is the file itself: lenders will see the bankruptcy for the rest of the six years, and many will decline or price accordingly. The pages on how lenders decide whether to accept you and what to do if you are refused credit explain what happens next.

What changes when you are discharged

Discharge is the point at which the legal restrictions of bankruptcy end. In England, Wales and Northern Ireland, discharge from debts usually takes place 12 months after the bankruptcy order is granted⁶. You are automatically discharged at the end of the bankruptcy period¹⁶, and the restrictions stop once the bankruptcy ends, on discharge or if the bankruptcy is cancelled¹⁷. In Northern Ireland, bankrupts on or after 27 March 2006 are automatically freed from bankruptcy after a maximum of 12 months¹⁸.

Discharge does not mean the bankruptcy disappears. It stays on your credit file for the full six years from the order¹⁶, and mortgage lenders in particular will see it there for that period³. What discharge does is end the restrictions: the £500 disclosure rule, the bar on being a company director, and the other limits listed in the jobs section below⁵.

One further point on timing: some BRUs or BROs last for up to 15 years, and because one can start any time before discharge, it could end up to 16 years from the date of bankruptcy⁵. The extension section below covers when that happens.

Debts that do not go away after discharge

Most unsecured debts are written off in bankruptcy, but a defined group survives it. The debts not cleared by bankruptcy include child maintenance arrears set by the Child Maintenance Service, criminal fines, compensation orders and victim surcharges, debts taken out after the bankruptcy order, fraudulent debts, mortgages and other secured debts if you keep the home, Social Fund loans, student loans, TV Licence arrears, personal injury compensation court orders, and payments ordered in family proceedings or divorce courts²⁰. R3 lists the same categories in shorter form: mortgage or rent, maintenance and child support payments, student loans, court fines and court-ordered payments must continue to be paid²¹.

Student loans deserve their own mention because people often assume they go the way of other unsecured debts. They do not: debts owed to Student Loans are not discharged with the rest of the unsecured debt²². Debts incurred through fraud are never discharged, and that applies to DROs as well as bankruptcy. GOV.UK guidance states that if any of your DRO debts are the result of fraud, they will not be discharged and you will still have to pay them¹¹.

In Scotland, one further cost can continue after discharge: in a full administration bankruptcy, contribution payments may continue for another three years⁹. So discharge ends the restrictions, but not necessarily every payment.

If you discover a debt you forgot to include, tell the official receiver or trustee looking after your bankruptcy, who will check whether it can be included²⁰. Many common unsecured debts, such as credit cards, overdrafts, utility arrears, store cards, catalogue debts and benefit overpayments that are not fraudulent, are included automatically²⁰. With a DRO the stakes are higher: a missed debt that pushes your overall debt level above £20,000 can lead to the DRO being cancelled²³.

Getting a mortgage after bankruptcy or an IVA

The six-year entry is the main obstacle, and it behaves the same way for both solutions: the write-off date for credit file purposes is when the IVA is completed or when you receive your discharge from bankruptcy¹. While you are still repaying debt through an IVA, it is unlikely you will be able to take out credit cards, loans or a mortgage²⁴.

Lenders differ in how they treat a completed IVA. Some will refuse any applicant who has ever had an IVA; others may only lend once the IVA has disappeared from the credit report after six years²⁴. In between, there are lenders willing to consider applicants whose IVA is at least three years old, fully settled, and whose credit history has been rebuilt with all payments kept up²⁴. Once the six years have passed and the IVA has gone from your credit history, a mortgage with a smaller deposit, of 5% or 10%, may be possible²⁴.

For bankruptcy, the same six-year window applies: lenders will see the bankruptcy on your credit file for six years³. There is no legal limit on borrowing after discharge³, so the barrier is the lender's own policy rather than the law.

Two practical points follow. First, rebuilding the file in the years after discharge matters as much as the passage of time, because lenders look at how accounts have been run since the insolvency, not just at the insolvency itself. The how to improve your credit score page covers that work. Second, if an IVA fails, the consequences can be severe: breaking the terms of an IVA can lead to being made bankrupt²². Where money allows, an IVA can also be a route to having a bankruptcy annulled, if you have enough for a regular payment after living expenses and can keep that up for around five years²⁵. An annulment cancels the bankruptcy, but the people you owe can start contacting you again for payment unless you set up an IVA²⁵.

Insurance after bankruptcy: what you must tell insurers

Insurance is one place where the £500 rule reappears, but in a different form. You must tell the insurance company about your bankruptcy if you pay in monthly instalments and the amount you have to pay back is over £500²⁶. You only need to tell the insurer about bankruptcy when they ask if the total you need to pay back is less than £500, or if you pay your insurance all at once²⁶. The logic is that monthly instalments are a form of credit, so the same disclosure idea applies.

Insurers know about your bankruptcy from your credit file, and this may make it harder to get a policy, may mean you pay more, or may mean you are refused²⁶. That is a market outcome, not a rule: there is no ban on insuring while bankrupt.

Two further points about disclosure and claims. First, if something changes after a policy has started, you will not usually have to tell the insurer about it until you renew the policy²⁷. The duty to be accurate falls on what you said when you took the policy out or renewed it, and non-disclosure at that point is one of the most common grounds for a claim being reduced or refused. The Financial Ombudsman Service handles complaints about misrepresentation and non-disclosure, so a disputed claim has a route beyond the insurer²⁷.

Second, compensation you are owed can pass to your trustee. When a consumer enters bankruptcy, their assets, including any right to compensation for a mis-sold PPI policy, pass to the trustee in bankruptcy²⁸. The same principle applies to motor finance redress: if you took out the finance agreement after your bankruptcy ended, or your bankruptcy was annulled by the courts, you have the right to make the claim and keep the compensation awarded, but if you have already made a claim, you must tell your lender about your bankruptcy²⁹. If you are under a DRO, redress that takes your total assets above the £2,000 threshold during the moratorium period also has consequences for the order²⁹.

Jobs, directorships and business restrictions during and after insolvency

Some jobs are closed to you until you are discharged from bankruptcy. The list includes charity trustee, company director, insolvency practitioner, Justice of the Peace, registrar of births, marriages and deaths, MOT authorised examiner, and consumer credit licence holder³⁰. The bar on being a company director ends with discharge: after 12 months you can be a company director again⁵.

If you are self-employed, you cannot change the name of your business during bankruptcy¹⁶. In Scotland, under the Minimal Assets Process (MAP), you cannot run a business unless certain conditions are met, and that restriction can apply during the six months after discharge before the bankruptcy is finalised³¹.

Beyond the formal bars, a record of bankruptcy can affect employment in other ways. In some jobs, a record of bankruptcy may lead to dismissal, demotion or other issues³⁰. And if the official receiver extends your bankruptcy restrictions, further jobs are closed off, including local or national government positions such as councillor or MP, school governor, and magistrate³⁰. The page on whether poor credit can affect your job covers the wider picture.

Where restrictions can last longer: extensions of up to 15 years

The 12-month discharge assumes the bankruptcy has been handled properly. Where the official receiver decides you have acted negligently or dishonestly, they can impose a bankruptcy restrictions undertaking (BRU) or seek a bankruptcy restrictions order (BRO) from the court, and this extends your bankruptcy restrictions for up to 15 years⁸. Where bankruptcy follows dishonest or reckless behaviour, the extension lasts for two to 15 years¹⁶. A BRO can be made where reckless or dishonest behaviour can be established, extending the imposition of bankruptcy for that period²².

The credit file consequence is direct: an extended restriction stays on your credit file for up to 15 years². Because a BRU or BRO can start any time before discharge, one could end up to 16 years from the date of bankruptcy⁵.

The same extension mechanism exists for DROs, where a debt relief restrictions order or undertaking extends your restrictions for up to 15 years¹³, and in Northern Ireland, where such orders may last from two to 15 years³². In Scotland, bankruptcy conditions can be extended up to 15 years on similar grounds¹⁵.

Scotland: sequestration and MAP bankruptcy work differently

Scotland has its own bankruptcy system, and the two terms mean the same thing: bankruptcy is often referred to as sequestration in Scotland²⁵. Sequestration and MAP bankruptcy are similar solutions to bankruptcy elsewhere in the UK, but with different benefits, risks and fees³³. They work differently to the bankruptcy available in the rest of the UK¹.

The differences that matter for this page are the thresholds and the timescales. The borrowing disclosure threshold is £2,000 rather than £500: you must tell a lender you are bankrupt if you apply to borrow more than £2,000 on your own or with someone else, or if you borrow any amount when you already have £1,000 of new debt since your bankruptcy¹⁵. Failing to disclose is a criminal offence⁹. The credit file period is the same six years¹⁵, and bankruptcy conditions can be extended up to 15 years¹⁵.

MAP bankruptcy has its own shape. You are discharged six months after it is awarded if you follow the set conditions, and it then takes another six months to finalise³¹. It will show on your credit file for at least six years, and that can be extended³⁴. To qualify, you must not have gone through sequestration in the last five years³¹. In most cases you can stay in your home as long as you continue to pay rent and follow your tenancy agreement; rent owed before the bankruptcy may be included, but rent after it starts must still be paid³⁴. The credit files in Scotland page covers the Scottish registers in detail.

Fees also differ across the UK. In England and Wales the bankruptcy fee is £680, and in Northern Ireland it is up to £683³³.

The DRO: 12 months, and the risk of cancellation

A DRO lasts for 12 months³⁵. During that moratorium period, creditors named in the order cannot take any action to recover their money without permission from the court³⁵. At the end of the 12 months, provided your circumstances have not changed, you are freed from all the debts included in the DRO³⁶. If your finances get better during the moratorium period, the DRO could be cancelled⁷, and you would be back to dealing with the debts.

The eligibility limits are strict, and they explain both who the DRO suits and where it can fail. You must be unable to pay your debts, owe no more than £50,000, and you can own a car to the value of £4,000 with the total value of other assets not exceeding £2,000³⁵. You must not have been subject to another DRO within the last six years, and not be involved in another formal insolvency procedure at the time you apply³⁵. Because of the asset limits, the scheme is not suitable for homeowners³⁵. DROs do not involve the courts; they are made under a partnership between the Insolvency Service and skilled debt advisers, called approved intermediaries, and the application must be made through an approved intermediary³².

The cancellation risks are worth setting out plainly:

• Your finances improve during the 12 months, so the DRO could be cancelled⁷
• A debt you left out pushes your overall debt level above £20,000, and the DRO may be cancelled²³
• Debts incurred through fraud are not discharged, and you will still have to pay them¹¹

If a creditor named in the DRO is pursuing you through an attachment of earnings order, sending them a copy of the DRO should stop it²³. And if your circumstances do improve, that is not automatically the end: the trustee or official receiver position in bankruptcy is that they can stop an attachment order and discuss your options with you²³. Free debt advice, from StepChange, National Debtline or Business Debtline, is the place to take those questions before acting.

Rebuilding your file afterwards

Once the insolvency has run its course, the work of rebuilding is about what the file shows from now on, not about erasing what happened. The old entry stays for its six years²; what you add around it is what a lender reads first.

The practical sequence is:

1. Check your credit report with each of the three credit reference agencies, which you can do for free, and confirm the insolvency entry shows the right start date¹⁰. The page on how to check your credit report for free explains how.
2. Confirm the entry is removed after six years, and raise a dispute if it is not. The correcting your credit report page sets out the process and the agencies' response deadlines.
3. Make sure you are on the electoral register, which lenders use to confirm your address. See the electoral register and your credit file.
4. Build a record of steady payments on whatever credit you can responsibly hold, starting small. Building a credit history from scratch and credit builder loans and saving plans cover the options, and how long a score takes to improve gives realistic timescales.
5. Keep credit utilisation low on any card you hold, since the proportion of available credit in use feeds directly into scores. See credit utilisation.

Two cautions finish the picture. Avoid credit repair companies that promise to remove accurate insolvency entries: accurate information cannot simply be deleted, and the credit repair companies page explains what they can and cannot do. And if a lender asks directly whether you have ever been bankrupt, answer honestly: the question is lawful, the answer is on the public record, and a false answer on a credit application is itself a problem. The debt solutions and your credit file page shows how each solution compares, and free, impartial debt advice from StepChange, National Debtline or Business Debtline is available if circumstances change again.