Bankruptcy Administration Improvement Act of 2025 in plain language

1: Short title

This section would give the Act a short title: the Bankruptcy Administration Improvement Act of 2025.

2: Findings

This section lists findings by Congress. Congress states that it has amended bankruptcy fee laws over time to keep the bankruptcy system self-supporting and to fairly divide the system's costs among the people who use it, and that because the system must be funded without cost to taxpayers, Congress has closely tracked its funding needs, including by requiring the Attorney General to report periodically on the United States Trustee System Fund. Congress states that because the system governing different types of bankruptcies is interconnected, it has established fees, including filing fees, quarterly fees in chapter 11 cases, and other fees, that together fund the courts, judges, United States trustees, and the trustees who serve in chapter 7 cases. Congress states that chapter 7 trustees are vital to the bankruptcy system because they work on the front lines, administering thousands of cases, and that they provide valuable returns of assets to government creditors, including the Internal Revenue Service, the Department of Agriculture, the Small Business Administration, and other federal, state, and municipal governments, as well as disbursing millions of dollars each year to private creditors such as medical providers, unsecured creditors, small businesses, and micro-enterprises like domestic support providers.

Congress states that chapter 7 trustee compensation has not increased since 1994: trustees still receive only $60 per case (made up of $45 under section 330(b)(1) and $15 under section 330(b)(2) of title 11, United States Code) in nearly 90 percent of chapter 7 cases, and no compensation at all in cases where the bankruptcy court waives the filing fee. Congress states that since 1994 there have been significant increases in salaries, attorney fees, budget appropriations, filing fees, and court-related fees, while the $60 paid to chapter 7 trustees has stayed the same and has not been adjusted for inflation; that in 2021 Congress tried to give chapter 7 trustees a raise, but they only received the increased compensation for one fiscal year; and that based on Consumer Price Index estimates, the $60 trustees received in 1994 would be worth more than $125 today.

Congress states that this Act and its amendments would: increase chapter 7 trustee compensation to $120 per case, an amount Congress describes as appropriate, overdue, and proportionate to what was intended in 1994; ensure adequate funding of the United States trustee system by increasing certain fees, which would also apply to districts that are not part of a United States trustee region as existing law requires; and support preserving existing bankruptcy judgeships that Congress says are urgently needed to handle current and expected increases in business and consumer bankruptcy caseloads. Congress also states that this Act would not change the chapter 7 filing fee, and would not modify, impair, or take away the authority of United States district courts or bankruptcy courts to waive filing fees for indigent individuals.

3: Trustee compensation

This section would raise the fee paid to trustees who serve in chapter 7 bankruptcy cases. It would change the trustee fee set out in section 330(b)(1) of title 11, United States Code, from $45 to $105. Combined with the separate $15 fee under section 330(b)(2) of title 11, United States Code, which this section does not change, trustees would receive $120 total per case instead of $60. This section would also eliminate subsection (e) of section 330 of title 11, United States Code, entirely; the text of this bill does not include what subsection (e) said, so this rendering cannot describe what rule is being removed.

This section would also set out where the fees collected under section 1930(a)(1)(A) of title 28, United States Code, go after trustees are paid under section 330(b)(1) of title 11, United States Code. Notwithstanding any other law, of the remainder: $63.51 would go to the special Treasury fund created under section 1931 of title 28, United States Code; $25.00 would go to the special fund created under section 10101(b) of the Deficit Reduction Act of 2005; and $51.49 would go to the United States Trustee System Fund created under section 589a of title 28, United States Code.

This section would also change how the United States Trustee System Fund is financed. It would replace the current rule in section 589a(b)(1) of title 28, United States Code, with a new rule directing that 28.33 percent of the fees collected under section 1930(a)(1)(B) of title 28, United States Code, be deposited into that fund. It would also reorganize section 589a(f)(1) of title 28, United States Code: it removes two of the items currently listed there as subparagraphs (B) and (C), and it renumbers the item currently listed as subparagraph (D) so that it becomes the new subparagraph (B), also changing a reference within that item from "Fourth" to "Second." The text of this bill does not include what subparagraphs (B), (C), and (D) said, so this rendering cannot describe what those items covered or what the change from "Fourth" to "Second" refers to.

4: Bankruptcy fees

This section would change part of the formula used to calculate quarterly fees in chapter 11 cases under section 1930(a)(6)(B) of title 28, United States Code: a period used in the calculation would change from 5 years to 10 years, and a multiplier used in the calculation would change from 0.8 to 1.1. The text of this bill does not include the rest of that formula, so this rendering cannot describe exactly what the period or multiplier apply to or how the change affects the fee owed.

This section would also extend a funding period set out in section 589a(f) of title 28, United States Code (as changed by section 3(c)(2) of this Act), by replacing the year 2026, everywhere it appears in that subsection, with 2031.

For each of fiscal years 2026 through 2031, and notwithstanding section 589a(b) of title 28, United States Code, this section would require that $5,400,000 of the quarterly fees collected under section 1930(a)(6) of title 28, United States Code, be deposited in the general fund of the Treasury. All the remaining fees collected under that section for those fiscal years, after setting aside that $5,400,000, would be deposited according to the rules in section 589a(f) of title 28, United States Code, as amended by this Act.

5: Extension of term of certain temporary offices of bankruptcy judge

This section would extend, from 5 years to 10 years, the length of the temporary terms for numerous temporary bankruptcy judge positions. For the temporary judgeships created under section 4 of the Bankruptcy Administration Improvement Act of 2020 (28 U.S.C. 152 note), it makes this same change repeatedly throughout that section: every place a 5-year term is set within subsections (a) through (f) of that section, including each lettered sub-item in those subsections (for example, subparagraphs (A) through (F) within subsection (b)), the term would become 10 years instead. The bill does not identify which judicial district or court each of these lettered provisions refers to; it identifies them only by their labels in the 2020 Act.

This section would also extend, from 5 years to 10 years, the term of a temporary bankruptcy judgeship created under section 1003(b)(2)(A) of the Bankruptcy Judgeship Act of 2017 (28 U.S.C. 152 note).

6: Effective date; application of amendments

This section would set the effective date for the Act. In general, the changes made by this Act would take effect on the first October 1 that occurs after the Act is enacted, except as described below for bankruptcy fees.

For trustee compensation (section 3): the changes made by section 3 would apply to any bankruptcy case commenced on or after that October 1 date, if the case is filed under chapter 7 of title 11, United States Code, or if it is a case filed under chapter 11, 12, or 13 of title 11, United States Code, that is later converted to a case under chapter 7.

For bankruptcy fees (section 4): the changes made by section 4 would apply to any chapter 11 case under title 11, United States Code, that is pending on or after a trigger date the bill describes as "October 1 that first occurs after October 1 that first occurs after the date of enactment of this Act." The bill repeats the phrase "first October 1 after" twice here, unlike everywhere else in this section, so it is not clear from the text alone whether this describes the same October 1 date used elsewhere in the bill or a later one. Section 4's changes would also apply to quarterly fees owed under section 1930(a)(6) of title 28, United States Code, for disbursements made in any calendar quarter beginning on or after the October 1 that first occurs after the date of enactment of this Act.