S. 3424 — Bankruptcy Administration Improvement Act of 2025

This section states congressional findings on the self-funding nature of the U.S. bankruptcy system, the essential role of chapter 7 bankruptcy trustees—who have received unchanged compensation of $60 per case ($45 under 11 U.S.C. §330(b)(1) and $15 under §330(b)(2)) since 1994 in nearly 90% of cases (with no compensation if filing fees are waived)—and increases in other bankruptcy-related costs. The findings note a 2021 effort that provided increased compensation for only one fiscal year (with $60 equivalent to over $125 today per Consumer Price Index estimates), and describe this Act's increases to $120 per case for trustees, certain fees to fund the U.S. Trustee System Fund (including in non-trustee districts), and support for existing bankruptcy judgeships, without altering chapter 7 filing fees or courts' fee waiver authority.

This section amends 11 U.S.C. 330(b)(1) to increase trustee compensation to $105 (from $45) and strikes subsection (e). It directs that the remainder of fees collected under 28 U.S.C. 1930(a)(1)(A)—after compensating trustees under 11 U.S.C. 330(b)(1)—be deposited as follows: (1) $63.51 in the special fund established under 28 U.S.C. 1931; (2) $25.00 in the special fund established under section 10101(b) of the Deficit Reduction Act of 2005 (28 U.S.C. 1931 note); and (3) $51.49 in the United States Trustee System Fund established under 28 U.S.C. 589a. It further amends 28 U.S.C. 589a by (1) revising subsection (b)(1)(A) to deposit $51.49 per case (from 40.46 percent of fees collected), and (2) reorganizing the priority order of claims on the United States Trustee System Fund in subsection (f)(1). (As background, these fees derive primarily from chapter 7 bankruptcy filing fees ($338 per case), with standing trustees receiving fixed compensation for administering consumer cases, particularly no-asset administrations, and remainders supporting the U.S. Trustee Program and deficit reduction.)

This section revises the quarterly fee schedule for chapter 11 bankruptcy cases under 28 U.S.C. 1930(a)(6)(B) by (1) changing the period in clause (i) to 10 years (from 5 years); and (2) in clause (ii), inserting "the greater of" before "0.4" and replacing "and" with "or" in subclause (I), and increasing the rate in subclause (II) to 0.9 percent (from 0.8 percent). (Quarterly fees are assessed on debtors' disbursements to fund U.S. Trustee System operations.) The section also (1) extends the special deposit period under 28 U.S.C. 589a(f) to 2031 (from 2026); and (2) for FY2026 through FY2031, notwithstanding 28 U.S.C. 589a(b), directs $5.4 million of fees collected under 28 U.S.C. 1930(a)(6) to the general fund of the Treasury, with the remainder deposited as specified in amended section 589a(f).

This section extends the terms of temporary bankruptcy judgeships (i.e., additional judges authorized by Congress for specific districts to address caseloads) created by the Bankruptcy Administration Improvement Act of 2020 and the Bankruptcy Judgeship Act of 2017 to 10 years (from 5 years).

This section establishes the effective date for the amendments made by this Act as the first day of the calendar quarter that first occurs on or after the date of enactment, with exceptions. Officer compensation amendments made by section 3 apply to chapter 7 bankruptcy cases commenced on or after the first October 1 following enactment, or to chapter 11, 12, or 13 cases converted to chapter 7 after that date. Bankruptcy fee amendments made by section 4 apply to chapter 11 cases commenced or pending on the first day of the calendar quarter that first occurs on or after enactment, and to quarterly fees under 28 U.S.C. §1930(a)(6) for disbursements made in any calendar quarter beginning on or after enactment.