Bankruptcy Bill Doubles Trustee Pay and Extends Temporary Judge Terms to 2031

The Bankruptcy Administration Improvement Act of 2025 is essentially a funding overhaul for the federal bankruptcy system, focusing heavily on getting money where Congress thinks it needs to go: boosting pay for the people who handle the cases and keeping the courts staffed. The core action here is hiking the compensation for Chapter 7 bankruptcy trustees and extending the lifespan of the system’s funding mechanisms.

The $60 Raise for the Cleanup Crew

If you’ve ever filed for Chapter 7 bankruptcy, you dealt with a Chapter 7 trustee—the person responsible for liquidating assets and paying creditors. Congress notes that these trustees, who are crucial for recovering funds for everyone from the IRS to small businesses, have been paid the same statutory fee of $60 per case since 1994. That’s a serious pay freeze, especially when $60 in 1994 money should be worth over $125 today. This bill fixes that by increasing the primary fee component paid to trustees from $45 to $105 (Section 3), effectively bringing their total compensation per case up to $120. This is a clear benefit for the trustees, who are often independent contractors, and should help keep qualified people in the system, which ultimately benefits creditors and filers by ensuring cases move efficiently.

Playing Financial Jenga with Filing Fees

To cover that pay bump and keep the U.S. Trustee System funded, the bill gets complex about how filing fees are allocated. After the trustee gets their $105, the remaining money from a Chapter 7 filing fee is split three ways: $63.51 goes to a special Treasury fund, $25.00 goes to the Deficit Reduction Act fund, and $51.49 goes into the U.S. Trustee System Fund (Section 3). For the average person filing for bankruptcy, the actual $338 filing fee isn't changing, and the court’s power to waive the fee for those who can’t afford it remains intact (Section 2). However, this intricate restructuring of where the money goes is designed to keep the entire system self-funded without relying on general taxpayer money, though it does make tracking the flow of funds more complicated.

Extending the Runway for Chapter 11 Fees and Judges

For businesses filing for Chapter 11 reorganization, the bill makes two major extensions. First, it pushes the deadline for the current system of depositing certain bankruptcy fees from 2026 out to 2031 (Section 4). More importantly for businesses in reorganization, the bill changes the rate for quarterly fees they pay on disbursements from 0.8 to 1.1 (Section 4). This means businesses currently operating under Chapter 11 will face a slightly higher quarterly fee obligation, extending that financial burden for an extra five years.

Second, the bill doubles the term limits for several temporary bankruptcy judge offices from 5 years to 10 years (Section 5). This is a move to maintain judicial capacity, acknowledging the expected rise in both business and consumer bankruptcy filings. While ensuring the courts have enough judges is essential, extending temporary positions for a decade suggests these roles are becoming permanent fixtures without the full process of creating permanent judgeships. This keeps the current system running smoothly, but it’s a temporary fix for a long-term staffing need.