The Personal Insolvency (Amendment) Bill 2020, which will now be signed into law, gives insolvent homeowners the right to seek review by a court if their mortgage lender or other creditors refuse a reasonable proposal for a personal insolvency arrangement.

This is already an option under the Personal Insolvency (Amendment) Act 2015, but only for home mortgage arrears dating from before 1 January 2015.

James Browne, minister of state for law reform, youth justice and immigration, said: “So a person at risk of losing their home, whose financial difficulties first arose from the Covid-19 pandemic, would be unable to apply for the court review.

“The bill removes the condition that the borrower’s home mortgage arrears must pre-date 1 January 2015, in light of these changed economic circumstances.”

The bill also raises the asset ceiling for an insolvent person applying for a debt relief notice from €400 to €1,500.

The minister said: “This will remove an obstacle that could otherwise affect recipients of some social welfare payments that are paid as lump sums, such as fuel allowance or carer’s support grant.”

The bill makes a number of other practical changes to ensure that personal insolvency processes work better for those affected by the pandemic.

Mr Browne said: “Living with unsustainable debt is a very stressful situation for individuals and families, and that is why this bill is so important. It can happen to anybody, and it can arise for reasons beyond the person’s individual control.

“Entering the insolvency process is not an easy way out, as is sometimes suggested. It requires continued engagement from the insolvent person. But it provides a vital pathway for people to get back to solvency, and to re-engage with our economy.”