Bankruptcy Bill Doubles Pay for Chapter 7 Trustees to $120, Extends Temporary Judge Terms to 10 Years

The newly introduced Bankruptcy Administration Improvement Act of 2025 is tackling some serious administrative plumbing in the U.S. bankruptcy system. At its core, this bill does two big things: it finally gives a raise to the folks who handle consumer bankruptcies, and it keeps a bunch of temporary bankruptcy judges on the bench for a lot longer.

The Long-Overdue Raise for Chapter 7 Trustees

If you’ve ever filed for Chapter 7—the most common type of consumer bankruptcy—you’ve dealt with a Chapter 7 trustee. These are the people who manage your case, try to recover assets to pay creditors, and ensure the process is fair. According to the bill’s findings (Sec. 2), their pay per case has been stuck at roughly $60 since 1994. That’s right, $60 for a complex legal process that involves governments, small businesses, and medical providers. If that $60 had just kept pace with inflation, it would be over $125 today.

This Act corrects that by increasing the trustee’s per-case compensation from $45 to $105 (Sec. 3), effectively bumping the total pay (when combined with existing fees) to about $120 per case. This is a crucial, practical change. If trustees aren't compensated fairly, fewer qualified people will take on these cases, meaning the system that helps millions of people manage debt could slow down or fail. This change applies to all new Chapter 7 cases filed after the effective date, which is set for October 1st of the year following enactment (Sec. 6).

Who Pays for the Upgrade? Fee Restructuring Explained

While the bill is careful to state it won't change the Chapter 7 filing fee or take away a judge's power to waive fees for those who can’t afford it, the money for this pay hike and general administrative costs has to come from somewhere. The bill achieves this by restructuring how various bankruptcy fees are allocated (Sec. 3, Sec. 4).

Essentially, the bill is playing musical chairs with government funds. It sets specific amounts of collected fees to go into the Treasury’s general fund, a special fund from the Deficit Reduction Act, and the U.S. Trustee System Fund. For example, it mandates that $5,400,000 annually from certain fees collected between 2026 and 2031 be diverted directly into the general fund of the Treasury (Sec. 4). This administrative shuffling is designed to keep the entire bankruptcy system self-funded, but it means that the administrative costs, while not directly increasing the consumer filing fee, are being managed through fee adjustments that could impact the total cost of a Chapter 11 business bankruptcy.

Institutionalizing the Temporary Judges

Perhaps the most significant change for the judicial system is the extension of temporary bankruptcy judge offices. The bill extends the terms of several temporary judgeships—created under previous acts in 2017 and 2020—from five years to ten years (Sec. 5). This means if a judge was appointed to a temporary spot in a busy district, they now have five more years on the bench before that position is reviewed or eliminated.

While this keeps experienced judges in place and prevents potential backlogs in courts that need the help, it also means these “temporary” positions are becoming institutionalized for a decade without requiring Congress to make them permanent or subject them to regular legislative review. It’s a practical fix for judicial capacity, but it reduces the frequency of oversight on these necessary but non-permanent roles.

Less Frequent Check-Ups on Fees

Finally, the bill changes the required review period for quarterly bankruptcy fees—the fees that businesses and larger estates pay—from every five years to every ten years (Sec. 4). This reduces the frequency with which the government must assess these administrative charges. While it might provide more stability for financial planning within the system, it also means less frequent oversight on how those fees are calculated and applied, essentially pushing the next major check-up further down the road.