Bankruptcy Bill Doubles Trustee Pay to $120, Extends Fees on Big Bankruptcies to 10 Years

The newly proposed Bankruptcy Administration Improvement Act of 2025 is mainly an internal funding overhaul for the federal bankruptcy system. Its biggest headline change is that it nearly doubles the compensation for the people who manage basic bankruptcy cases, while also making major adjustments to how the entire system is funded.

The $60 Raise for Chapter 7 Trustees

If you're dealing with personal or small business debt, you might file for Chapter 7 bankruptcy. The person who handles your assets (or lack thereof) is the Chapter 7 trustee. Congress found that the flat fee paid to these trustees—$60 per case—hasn't been raised since 1994. The bill acknowledges that $60 back then is worth over $125 today. This legislation addresses that by increasing the trustee's compensation from $45 to $105 per case (Sec. 3). Wait, $45 to $105? Yes, the bill amends the existing law (11 U.S.C. 330(b)(1)) which currently sets the compensation at $45, but the findings section (Sec. 2) references the $60 payment. Either way, the compensation is getting a significant bump, which the bill argues is essential for maintaining a strong, self-funded bankruptcy system.

Where the Money Goes: A Fee Restructure

This bill is essentially a detailed instruction manual for how to slice up the Chapter 7 filing fee. Currently, when someone files for Chapter 7, the fee is distributed among several government funds. This bill keeps the overall filing fee the same but changes the distribution percentages to specific dollar amounts to fund the increased trustee pay and stabilize the system's finances. After the trustee gets their $105, the remaining money is divided precisely: $51.49 goes to the United States Trustee System Fund, $63.51 to a special Treasury fund, and $25.00 to a Deficit Reduction Act fund (Sec. 3). For the average person filing bankruptcy, this doesn't change the cost of filing, but it guarantees funding for the system that handles their case.

The Cost of Reorganization Just Got Longer

Here’s where the bill hits the corporate side of things—specifically Chapter 11 and Chapter 15 cases (think large business reorganizations). Currently, companies in these reorganizations pay quarterly fees based on their disbursements for up to five years after their plan is confirmed. This bill extends that period to 10 years (Sec. 4). That’s five more years of fees for companies trying to get back on their feet. Furthermore, the maximum quarterly fee is also getting a slight increase, from $250,000 to $281,250. For a company that successfully emerges from bankruptcy, this extension means a decade of continued financial obligation to the bankruptcy system. The bill also extends the period during which these fees must be deposited into the U.S. Trustee System Fund until 2031, providing the system with a guaranteed, long-term revenue stream (Sec. 4).

Stability for the Bench

Finally, the bill addresses the judiciary itself. It extends the term for several temporary bankruptcy judge positions from five years to 10 years (Sec. 5). This is a move to preserve judicial capacity and keep the courts functioning smoothly, ensuring that the current caseloads—and future ones—can be handled without disruption. Essentially, this is a procedural fix to avoid having to reauthorize these necessary judgeships every five years.