Tánaiste Joan Burton has said legislation to cut the bankruptcy term to one year will be enacted by Christmas.

The Cabinet today agreed a proposal from the Minister for Justice Frances Fitzgerald to reform bankruptcy laws in Ireland.

Speaking today, Ms Burton said: “I am very confident we will see the legislation enacted before Christmas.”

The proposal was first initiated by Labour TD Willie Penrose who suggested cutting the three-year regime to one year.

The proposals by the Minister are aimed at ending bankruptcy tourism under which many Irish people have gone abroad and been declared bankrupt there.

The legislation will also significantly increase the penalties for those who hide assets or income from their debtors.

Under the new provisions a person found to be concealing their assets could face an increased term of 15 years in bankruptcy from the proposed one-year term.

The law currently states the bankruptcy term could be increased from three years to eight if the person is found to be hiding assets.

Ms Fitzgerald will also allow for an 18-month bankruptcy discharge for those already in the process more than a year.