Bankruptcy Administration Improvement Act of 2025
The Bankruptcy Administration Improvement Act of 2025 is a comprehensive package aimed at (1) boosting compensation for Chapter 7 bankruptcy trustees, (2) reorganizing how bankruptcy-related fees fund the federal bankruptcy system (including the U.S. Trustee System Fund), (3) extending the tenure of certain temporary bankruptcy judge offices, and (4) making related adjustments to quarterly and case-related fee structures. The bill is designed to ensure the bankruptcy system remains self-funded, preserve essential judicial capacity, and support front-line administration of cases. The changes would apply to cases commenced after the act’s effective date (with specific transitional rules for certain fee and compensation provisions). In short, the bill would increase per-case pay for Chapter 7 trustees, adjust how fee revenue is allocated among the Treasury, deficit-reduction funds, and the UST system, raise some quarterly fee amounts, and extend the term lengths of temporary bankruptcy judgeships. It also broadens the funding base and timelines to better support the U.S. Trustee program and related bankruptcy administration activities, while keeping indigent filers’ fee-waiver protections intact.
Key Points
- 1Trustee compensation increases and related changes
- 2- Section 3 increases the trustee compensation payable under 11 U.S.C. 330(b)(1) from $45 to $105 per case and repeals subsection (e). The bill, including its findings, indicates this change is intended to raise total Chapter 7 trustee pay to about $120 per case. The net effect is a substantial per-case raise for trustees handling Chapter 7 cases.
- 3Allocation and funding of bankruptcy-related fees
- 4- Section 3(b) restructures how the remainder of fees collected under 28 U.S.C. 1930(a)(1)(A) are distributed after paying Chapter 7 trustees, directing portions to:
- 5- $63.51 to the Treasury’s special fund under 28 U.S.C. 1931
- 6- $25.00 to the Deficit Reduction Fund created by the Deficit Reduction Act of 2005
- 7- $51.49 to the United States Trustee System Fund (UST System Fund)
- 8UST System Fund formula and controls
- 9- Section 3(c) amends 28 U.S.C. 589a to change the share of certain fees that go to the UST System Fund to 28.33% (instead of the prior structure), and reorganizes subparagraph designations, effectively shifting how funds flow to the UST System Fund.
- 10Bankruptcy fees adjustments
- 11- Section 4 changes the quarterly fees under 28 U.S.C. 1930(a)(6)(B):
- 12- The 5-year term reference is replaced with a 10-year term.
- 13- A component currently at 0.8 is increased to 1.1.
- 14- Section 4 also extends the deposit period for these and related fees from 2026 to 2031 and requires certain fee collections between 2026–2031 to be deposited according to the amended scheme, including depositing a $5.4 million annual amount to the general fund.
- 15Extension of temporary bankruptcy judge offices
- 16- Section 5 extends the term of certain temporary bankruptcy judge offices from 5 years to 10 years across multiple subsections (and related provisions in the Bankruptcy Administration Improvement Act of 2020 and the Bankruptcy Judgeship Act of 2017), ensuring longer-tenure temporary judgeships to handle growing caseloads.
- 17Effective date and transitional rules
- 18- Section 6 provides that, generally, the amendments take effect on October 1 following enactment, with specific transitional rules:
- 19- Trustee compensation changes apply to cases commenced on or after October 1 following enactment (and certain conversions from other chapters to Chapter 7 cases).
- 20- Fee-related changes apply to cases pending on or after October 1 following enactment and to calendar quarters beginning after that date.
- 21- The act notes that it does not alter the Chapter 7 filing fee itself or the authority to waive filing fees for indigent filers.