New laws will also allow them to keep their car, but only if its worth €2,000 or less.
The Personal Insolvency Bill allows debts of up to €3m to be written off but there are limits on what someone can keep for personal use and on "reasonable" living expenses.
Justice Minster Alan Shatter has described the Bill, now passed by the Dail, as the "most radical and comprehensive reform of our insolvency laws".
He says information will go online by March to tell the public how the process will work.
The Bill is designed to help thousands of people in financial difficulty with banks having to accept when a debt cannot be repaid.
It provides for the introduction of three new debt resolution processes which will require court approval but are "essentially non-judicial in nature".
Under the Debt Relief Notice (DRN) unsecured debt up to €20,000 can be written off subject to a three-year supervision period.
The Debt Settlement Arrangement (DSA) allows settlement of unsecured debt with no limit, normally over five years.
The Personal Insolvency Arrangement (PIA) will allow settlements for secured debt of up to €3m and this cap can be increased with the consent of all secured creditors.
The new legislation will allow automatic discharge from bankruptcy after three years instead of the current 12-year arrangement.
Mr Shatter said it was hoped to launch the arrangements within the first three months of next year with an office, a website and a public information campaign.
The service, he said, expected about 15,000 applications under the DSA and PIA with a further 3,000-4,000 applications under the DRN in the first full year.
"We would also expect about 3,000 bankruptcy applications during this time," compared to 30 bankruptcy adjudications in 2011. A small team of specialist Circuit Court Judges will deal with applications.
Guidelines on reasonable living expenses for debtors are to be drawn up, taking account of individual circumstances, the size of the household, age health and any disabilities.