HARD-PRESSED homeowners face being ignored under new personal insolvency laws, the European Commission has warned.
The new laws could see the focus placed on "big ticket" mortgage cases at the expense of smaller mortgage holders in greater distress.
In the draft review, commission officials reiterated their concern that debts of up to €3m could be written off, claiming the figure appeared high.
Pointing out that the average mortgage debt is about €300,000, the document said that banks, lawyers and insolvency practitioners could focus on high-end cases.
"The efficiency of the system could also be jeopardised if the insolvency service is overloaded with large, complex cases, which could involve a multitude of interconnected debts," the draft report said.
TDs and senators approved the Personal Insolvency Bill before Christmas and President Michael D Higgins has signed it into law.
It cuts the period of insolvency from 12 years to three and lets debts of up to €3m be written off. It also contains measures to protect the family home.
The review of the bailout programme also advised that the Government amend the law to remove a legal impediment to repossessions.
However, it stressed families should be kept in their homes wherever possible. It said robust implementation of the insolvency regime and "timely reform" are "essential to effectively dealing with legacy unsustainable debts".
The latest figures from the Central Bank show that up to 20,000 homeowners are two years or more behind with their mortgage. About 7,000 buy-to-lets are in arrears.
In October, the director of banking supervision Fiona Muldoon warned that the failure of banks to deal with arrears risks bankrupting the country a second time.
Dun Laoighaire TD Richard Boyd-Barrett accused the commission of pushing the State to make it easier for the repossession of family homes.
"That is an absolute disgrace when they should be protecting the family homes," he said.
"It seems to be all about protecting the banks, increasing the profitability of the banks rather than concern for the citizens and people in distressed mortgages."
The commission said that the long-term nature of mortgage arrears was a persistent source of concern.