In its twice-yearly assessment of the health of the global economy, the IMF outlines evidence from a range of countries where mechanisms have been put in place to cut household debt levels -- boosting personal spending and helping economic growth.
The report said: "Bold household debt restructuring programs can significantly reduce the number of household defaults and foreclosures and substantially reduce debt repayment burdens."
It also said that property foreclosures can lower house prices locally by as much as 30pc -- so avoiding these foreclosures can help stabilise prices.
Launching the report, the IMF's Daniel Leigh said in cases such as in Ireland "government debt cannot be increased".
He said this is the kind of situation where "targeted restructuring can be effective, especially if it is done case-by-case in the courts".
His colleague, Jorg Decressin, noted that work to reform the Irish personal bankruptcy system was ongoing and important, but said the IMF would not be drawn on specific measures that could be taken. Ireland was not one of the countries analysed in the study.
But the analysis shows that countries such as Ireland, with high levels of household debt, go through a longer and worse recession than those with lower levels of mortgage debt.
Irish household debt, at over 200pc of GDP, is the highest of any advanced economy.
The most recent figures from the Central Statistics Office here show that over 70,000 homeowners or 9.2pc of all mortgages are now in arrears of more than 90 days.
The IMF economists said recessions that follow periods in which households have run up large debts tend to last "at least five years".
And the loss of output during this type of recession is four times greater than in more normal "spending recessions", it found.
But the study said restructuring household debt "can significantly reduce debt repayment burdens and the number of household defaults and foreclosures".
It said the estimates suggest that a single foreclosure lowers the price of a neighbouring property by about 1pc.
"The effects can be much larger when there is a wave of foreclosures with estimates of price declines reaching almost 30pc," the report said.
While the research shows that generous debt relief for household debt helps countries recover more quickly, the fund also warned about the importance of a comprehensive framework with clear communication to the public and a clear time frame.
It said a strong banking sector and government support was "crucial" to the success of such schemes.
The ability of Irish banks to withstand large debt writedowns without requiring additional capital from the taxpayer is questionable.
And the report also warned that there would be clear winners and losers in any restructuring programme, with the less indebted having to pay for the relief of those under financial stress.
It said the "friction" caused by debt restructuring in the past is one of the reasons that such policies have rarely been used.
"The success of such programmes depends on careful design," it said. A badly conceived scheme "can do more harm than good and undermine the health of the financial sector".
As part of the analysis, the IMF studied the response of a number of countries to situations where large parts of the population are burdened with high mortgage debt in a recession.
It found that debt restructuring programmes can help prevent self-reinforcing cycles of falling house prices and lower aggregate demand.
"Such policies are particularly relevant for economies with limited scope for expansionary macro-economic policies and in which the financial sector has already received government support," it said.
Ireland meets both these criteria.
The report specifically cites ongoing debt reduction efforts in Iceland. The IMF had a significant input into the design of these -- as it was the main source of funding to the north Atlantic state after the collapse of its banking system in 2008.