Bankruptcy Bill Doubles Trustee Pay to $120, Funds Raise by Tripling Fees on Big Chapter 11 Cases

The Bankruptcy Administration Improvement Act of 2025 is essentially a system maintenance bill that aims to give a long-overdue raise to the folks who handle personal and small business bankruptcies, and it’s funding that raise by hitting large corporate bankruptcies with significantly higher fees.

The Long-Awaited Raise: What’s in it for the Trustees?

If you’ve ever filed for Chapter 7 bankruptcy (the liquidation kind), you dealt with a Chapter 7 trustee. These people are the system’s workhorses, handling thousands of cases to make sure assets are found and distributed fairly. The bill notes that their compensation has been stuck at $60 per case since 1994. That’s right—1994. Adjusting for inflation, that $60 should be over $125 today.

This bill (Sec. 3) finally addresses this by increasing the trustee’s compensation from $45 to $105 per case, effectively bringing the total administrative fee paid to the trustee to $120 per case. This is a massive and necessary adjustment, ensuring that the people who administer these cases—often for individuals struggling financially—are paid a rate that makes the job financially viable. It’s a clear win for the people who keep the personal bankruptcy system running, and crucially, the bill specifies it will not change the Chapter 7 filing fee or the ability of courts to waive fees for indigent individuals (Sec. 2).

Corporate Bankruptcy Pays the Tab

So, where does the money come from to fund this raise and keep the rest of the bankruptcy judicial system afloat, including preserving existing judgeships (Sec. 5)? The bill shifts the burden to large corporate Chapter 11 cases—the kind that involve millions or billions in assets and take years to resolve.

Under Section 4, the bill makes two major changes to the quarterly fees paid by large Chapter 11 debtors:

1. Fee Increase: For disbursements over $1,000,000, the bill significantly increases the fee percentage. The new rate will be the greater of 0.4% of the disbursements or a new rate of 0.9% of the disbursements. This is more than double the current rate for the largest cases, meaning major corporations undergoing restructuring will see their administrative costs jump.
2. Time Extension: Perhaps more impactful, the bill extends the period during which these quarterly fees must be paid from 5 years to 10 years after the case is filed. This turns a five-year administrative fee obligation into a decade-long one for companies trying to emerge from bankruptcy. For a massive retailer or airline filing for Chapter 11, this ten-year fee obligation will significantly increase the total cost of the reorganization process.

This move essentially uses the largest corporate bankruptcies as the dedicated funding source for the entire bankruptcy system, including the U.S. Trustee System Fund, and ensures that funds are available to maintain critical court functions and judgeships until at least 2031 (Sec. 4).

The Real-World Trade-Off

The goal here is straightforward: stabilize the system and give the individual case handlers a much-needed raise. The cost is also clear: increased administrative overhead for large corporate restructurings. While this doesn't directly affect the average person filing Chapter 7, the increased fees on Chapter 11 cases could have a ripple effect. Higher administrative costs in a corporate bankruptcy mean less money is available to pay back creditors—like suppliers, landlords, or even pension funds—and could slightly increase the cost of doing business for companies that rely on Chapter 11 to survive and restructure. It’s a trade-off where the system gains stability and fairness for its lowest-paid workers, funded by the deep pockets of the largest filers.