Legislation to reduce the bankruptcy term from three years to one year will be in place by the end of the year, Taoiseach Enda Kenny has said. Mr Kenny has told the Dáil that the Government has accepted the need to reduce the term from the recently introduced three years to one year.

The move had been championed by Labour Longford-Westmeath TD Willie Penrose, and was backed by the Labour parliamentary party.

TDs and senators are calling on the Minister for Justice and Equality, Frances Fitzgerald, to cut the bankruptcy term to one year from three, in a report published on Friday. However, it was opposed by the Department of Finance and did not feature in the Government’s mortgage arrears package earlier this year.

Learn more about declaring bankruptcy in Ireland.

Labour TD Mr William Penrose said: “This is critical. The current situation where it is three years’ bankruptcy here and one year north of the Border is rather silly and impractical. “This is something the Labour Party has supported and called for and I am pleased to see it will now happen.”

When the legislation is adopted, this would bring Irish bankruptcy law into line with the UK laws.