Measures are to be introduced to allow mortgage lenders, on a case-by-case basis, to write off portions of mortgages.
Finance Minister Michael Noonan made the announcement today as the Government unveiled further details of the reform of the bankruptcy laws.
He said that there are thousands of people who do not want to be insolvent or bankrupt, but are finding it very hard to pay their loans.
Minister Noonan says the Central Bank will now ensure that for these people, settlement arrangements are arrived at - including write-offs if necessary.
"Well, somebody who can pay nothing at all should look at the terms of the new legislation," he said.
"But the banking arrangements on a voluntary basis will be for those who are not insolvent, but who find the burden too onerous to pay in full, and then arrangements will be made."