Legislation to reduce the term of bankruptcy from three years to one has been introduced in the Dáil by Minister for Justice Frances Fitzgerald.

The Bankruptcy (Amendment) Bill is expected to pass all stages in the Dáil on Tuesday and in the Seanad on Thursday.

Ms Fitzgerald said the legislation would introduce “several absolutely key changes” to Irish bankruptcy law.

Along with a reduction in the duration of bankruptcy, in line with the term in Northern Ireland, England and Wales, it also cuts the length of time a bankrupt person must make payments to their creditors, from five years to three.

The Minister said the changes would ease the impact on most bankruptcy cases where people did not seek to go bankrupt, and who “have co-operated in an open manner with the bankruptcy process, and handed over their income and assets towards repayment of their debts”.

Ms Fitzgerald stressed there would be significant sanctions for bankrupt person who did not co-operate with the bankruptcy or tried to conceal their income or assets from creditors.

She said it would abolish the requirement for a court sitting in all bankruptcy cases.

People already in bankruptcy will be able to avail of the changes, “subject at maximum to a six month transitional period”.

Ms Fitzgerald praised Labour TD Willie Penrose who had first proposed the reduction in bankruptcy terms in a private member’s Bill.

Fianna Fáil justice spokesman Niall Collins said his party would support the Bill and praised Mr Penrose. He pointed out however that all other private member’s Bills had not been progressed.

Mr Collins said the changes would bring Irish bankruptcy laws in line with those in the UK, they would remain out of line with most other jurisdictions.

Mr Collins said earlier this year the Minister for Finance rejected a proposal to cut bankruptcy to one year, citing a lack of analysis on its effects and warning that if Ireland acted in haste the best outcome might not be achieved.

Sinn Féin justice spokesman Pádraig Mac Lochlainn said those most likely to benefit were people with larger debts, rather than people with a mortgage debt, but he said it would mean people in the Republic would have the same terms as those in the North.

Mr Mac Lochlainn party supported the Bill as a pragmatic step but said it was no solution for five years of bad financial management.