The Cabinet has signed off on plans to cut bankruptcy to one year.
Legislation is to be enacted within a few weeks.
It will cut the bankruptcy period from the current three years and bring it into line with England, Wales and the North.
Tánaiste Joan Burton has said she hopes it will assist people who have so far been reluctant to engage with banks.
“With the introduction of this legislation there's a re-weighing of the scales in favour of the person or the family who's indebted,” said the Tánaiste.
“Our object is to keep everybody in the family home, and this I think will provide a basis on which banks will have to come to much better arrangements with individuals and families”.