Bankruptcy Administration Improvement Act of 2025
Bankruptcy Administration Improvement Act of 2025 aims to reform the funding and administration of the bankruptcy system, with a focus on Chapter 7 trustee compensation, funding for the United States Trustee System Fund, and the tenure of temporary bankruptcy judges. The bill increases the base per-case pay for Chapter 7 trustees, redirects and expands funding from various bankruptcy-related fees into specific funds, extends the duration of temporary bankruptcy judge appointments, and makes related adjustments to when these changes take effect. It preserves the basic structure of filing fees and debtors’ rights to indigent waivers while shifting how revenues are allocated to support the bankruptcy system. In broad terms, the bill seeks to bolster the manpower and operations of the bankruptcy system (trustees, the U.S. Trustee program, and judges) by increasing compensation and extending judge-term continuity, funded through adjusted fee allocations and deposits, with targeted effective dates for new cases and certain conversions.
Key Points
- 1Trustee compensation increase: Chapter 7 trustees’ base compensation under section 330(b)(1) would rise from $45 to $105 per case, and the separate $15 component previously paid under subsection 330(b)(2) would be removed. This effectively increases per-case trustee pay for most cases from $60 to $105 (the bill’s findings cite a $120 target, but the text sets $105 per case from the revised base).
- 2Funding reallocations for the Trustee system: After paying trustees, the remaining fees collected under 28 U.S.C. 1930(a)(1)(A) are to be distributed to three special funds: $63.51 to the Treasury’s 1931 fund, $25.00 to the Deficit Reduction Act fund, and $51.49 to the United States Trustee System Fund (USTSF).
- 3United States Trustee System Fund adjustments: The USTSF now receives a defined percentage of certain fees (e.g., 28.33 percent of the fees collected under 1930(a)(1)(B)) with streamlined subparagraph structure, aligning funding mechanisms for the US Trustee Program.
- 4Bankruptcy fees and deposits: Quarterly fees under 28 U.S.C. 1930(a)(6)(B) are adjusted (the 5-year reference is replaced with 10-year), and the deposit period for certain fees is extended from 2026 to 2031. For fiscal years 2026–2031, specified fee revenues are to be deposited according to new rules, with $5.4 million allocated to the general fund of the Treasury.
- 5Extension of temporary bankruptcy judge terms: The terms for temporary bankruptcy judge offices are extended from 5 years to 10 years across multiple sections, and related provisions from the Bankruptcy Judgeship Act of 2017 are similarly updated to allow 10-year terms.
- 6Effective date and transitional rules: Most amendments take effect on October 1 of the first October after enactment. The changes to trustee compensation apply to new cases filed on or after that date (and certain conversions to chapter 7), while the fee-related changes apply to cases pending on or after that date. The extended judge terms and related funding changes have corresponding effective rules.