Bankruptcy Administration Improvement Act of 2025

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

This section would state Congress's findings behind the Act. Congress finds that it has adjusted the laws governing bankruptcy fees over time to keep the bankruptcy system self-supporting while fairly dividing its costs among the people who use it. Because the system is meant to fund itself at no cost to taxpayers, Congress has closely tracked its funding needs, including through periodic reports the Attorney General must make on the United States Trustee System Fund. Congress finds that the bankruptcy system's fees, including filing fees, chapter 11 quarterly fees, and other fees, together fund the courts, judges, United States trustees, and the trustees who serve in chapter 7 cases under title 11, United States Code. Congress finds that chapter 7 trustees are vital to the bankruptcy process because they work at the front line of bankruptcy administration, handling 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. Congress also finds that the work of chapter 7 trustees results in millions of dollars disbursed annually to private creditors of all types, including medical providers, unsecured creditors, small businesses, and micro-enterprises such as domestic support providers. Congress finds that despite this essential role, chapter 7 trustee compensation has not increased since 1994: trustees still receive only $60 per case (composed 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 receive no compensation at all in cases where the bankruptcy court waives the filing fee. Congress finds that since 1994 there have been significant increases in salaries, attorney fees, budget appropriations, filing fees, and court-related fees associated with chapter 7 bankruptcies, while the $60 paid to chapter 7 trustees has stayed the same and has not even been increased for inflation; that in 2021 Congress attempted to give chapter 7 trustees a raise, but the trustees only received increased compensation for one fiscal year; and that, based on Consumer Price Index estimates, the $60 paid to trustees in 1994 would be the equivalent of over $125 today. Congress finds that this Act and its amendments would increase the compensation of chapter 7 bankruptcy trustees to the level Congress considers appropriate, overdue, and proportionate to what was intended in 1994, by raising total trustee compensation to $120 per case; would help ensure adequate funding of the United States trustee system through the increase of certain fees, which would also apply to districts that are not part of a United States trustee region as required by existing law; and would support the preservation of existing bankruptcy judgeships that Congress considers urgently needed to handle existing and anticipated increases in business and consumer caseloads. Finally, Congress finds that this Act would not alter the chapter 7 filing fee, and would not modify, impair, or supersede the current authority of the United States district courts, or of bankruptcy courts, to waive the payment of filing fees by indigent individuals.

This section would raise the per-case fee that funds chapter 7 bankruptcy trustee compensation under section 330(b)(1) of title 11, United States Code, from $45 to $105; combined with the unchanged $15 paid under section 330(b)(2) of title 11, this would raise total chapter 7 trustee compensation to $120 per case. This section would also strike subsection (e) of section 330 of title 11, United States Code, in full; the bill text does not include the wording of that subsection, so what it required before its removal cannot be described further here. This section would also provide, notwithstanding any other provision of law, how the remainder of the fees collected under section 1930(a)(1)(A) of title 28, United States Code, is divided after chapter 7 trustees are paid under section 330(b)(1) of title 11: $63.51 would be deposited in the special fund of the Treasury established under section 1931 of title 28, United States Code; $25.00 would be deposited in the special fund established under section 10101(b) of the Deficit Reduction Act of 2005; and $51.49 would be deposited in the United States Trustee System Fund established under section 589a of title 28, United States Code. This section would further amend section 589a of title 28, United States Code, so that the United States Trustee System Fund's share of fees collected under subsection (b)(1)(A) becomes a flat $51.49 of the fees collected in each case, replacing the prior share of 40.46 percent of the fees collected. This section would also restructure the list of provisions in section 589a(f)(1) of title 28, United States Code, by removing two of its items (formerly the subparagraphs designated (B) and (C)) and by redesignating the remaining item, formerly subparagraph (D), as subparagraph (B), while changing a word within it from Fourth to Second. The bill text does not include the underlying list of provisions in section 589a(f)(1), so the practical effect of this restructuring on the deposit of fees cannot be described further here.

This section would change the formula for the quarterly fees payable under section 1930(a)(6)(B) of title 28, United States Code. It would extend a 5-year period referenced in that formula to a 10-year period, and it would change the fee calculation so that, instead of two amounts applying together, the fee would be the greater of two alternative amounts: one based on the figure 0.4, and another based on a figure that would rise from 0.8 to 0.9. The bill text does not include the surrounding statutory language that states what these figures measure (for example, whether they are percentages, and of what amount), so the precise dollar effect of this change cannot be described further here. This section would also extend, from 2026 to 2031, each date that appears in section 589a(f) of title 28, United States Code (as already amended by section 3 of this Act), which governs the period for certain fee deposits. Finally, notwithstanding section 589a(b) of title 28, United States Code, this section would provide that for each of fiscal years 2026 through 2031, the fees collected under section 1930(a)(6) of title 28, United States Code, minus $5,400,000, would be deposited as specified in section 589a(f) of title 28, United States Code, as amended by this Act, and that the $5,400,000 itself would be deposited in the general fund of the Treasury.

This section would amend section 4 of the Bankruptcy Administration Improvement Act of 2020 (28 U.S.C. 152 note) by striking 5 years and inserting 10 years in subparagraphs (A)(i) and (B)(i) of subsection (a)(2); in subparagraphs (A)(i) through (F)(i) of subsection (b)(2); in subparagraphs (A)(i) and (B)(i) of subsection (c)(2); in subparagraphs (A)(i) and (B)(i) of subsection (d)(2); in subsection (e)(2)(A); and in subsection (f)(2)(A). The effect is to extend, from 5 years to 10 years, whatever term each of those provisions sets. The bill text does not include the wording of section 4 of the Bankruptcy Administration Improvement Act of 2020, so what each of these subsections and subparagraphs individually governs, including how many temporary bankruptcy judgeships are involved, cannot be described further here. This section would also amend section 1003(b)(2)(A) of the Bankruptcy Judgeship Act of 2017 (28 U.S.C. 152 note) by striking 5 years and inserting 10 years, the same change described above. The bill text does not include the wording of section 1003(b)(2)(A), so what that provision governs cannot be described further here.

This section would set out when the Act's amendments take effect. Except as described below, the amendments made by this Act would take effect on the first day of the calendar quarter that first occurs on or after the Act's date of enactment. As an exception, section 3 and the amendments it makes (raising trustee compensation) would apply to any case under title 11, United States Code, commenced on or after the first October 1 that occurs after the date of enactment, if the case is filed under chapter 7 of title 11, United States Code, or if it is filed under chapter 11, 12, or 13 of title 11 and is later converted to a case under chapter 7. As a second exception, section 4 and the amendments it makes (bankruptcy fees) would apply to any case commenced or pending under chapter 11 of title 11, United States Code, on the first day of the calendar quarter that first occurs on or after the date of enactment, and to quarterly fees payable under section 1930(a)(6) of title 28, United States Code, as amended by section 4, for disbursements made in any calendar quarter that begins on or after the date of enactment.