However, borrowers will have to wait until later in the year before measures in the Personal Insolvency Bill will be of benefit.
The changes include the reduction of the term of bankruptcy from 12 years to three.
Alan Shatter, the justice minister, and Michael Noonan, the finance minister, will launch the 205-page heads of legislation, which include judicial and non-judicial measures to help borrowers.
Proposals to overhaul the insolvency laws were proposed by the Law Reform Commission as long ago as 2009.
While the previous administration failed to tackle reforms, the current Government pledged it would address the antiq-uated rules on bankruptcy.
The heads of legislation were signed off on by the Cabinet yesterday but will be debated in Leinster House over the coming weeks and may not be ready for final publication until April, as agreed with EU lenders.
A spokesman said the bill was “a major step” and that other measures on alleviating mortgage debt would follow shortly, as proposed by the Keane report into debt last year.
Those with heavy debts could apply for bankruptcy and be released from its terms after three years as opposed to the 12-year period that exists at present, said the spokesman.
A debt resolution agency previously flagged by the Keane report and commission will also be set up under the proposed legislation, which will help act as a mediator between lenders and borrowers.
There are also plans for a debt relief certificate, which would allow borrowers a full write-off of unsecured debt of up to €20,000 after a one-year period; debt settlement and personal insolvency arrangements for sums of €20,001 or over will also be announced.
Mr Noonan has signalled before that banks would be encouraged to come to debt resolution agreements, particularly with mortgage holders, before the new bankruptcy laws come in.
Sean Quinn and developer Ray Grehan recently sought bankruptcy in the North and UK, where applicants can be discharged from the terms after just one year.
Fewer than 30 people were declared bankrupt in the Republic in 2010.