What is the Bankruptcy Administration Improvement Act of 2025?
In early February, the Bankruptcy Administration Improvement Act of 2025 was signed into law. The new law does three major things that concern the administration of bankruptcy cases. First, it increases bankruptcy trustee fees in Chapter 7 cases. Second, it extends the increased Chapter 11 quarterly filing fee schedule. And, third, it extends the timeline for temporary bankruptcy judgeships. For individuals or businesses that are considering filing for bankruptcy, the new law may impact you. What do you need to know about the three primary effects of the law in relation to your bankruptcy case? Our West Palm Beach bankruptcy lawyers can tell you more about the law and how the changes are likely (or not) to impact individual or business bankruptcy filings in Florida.
Increasing the Bankruptcy Trustee Fees in a Chapter 7 Case
When a debtor files for Chapter 7 bankruptcy, the trustee must be paid. The Bankruptcy Administration Improvement Act of 2025 increases a Chapter 7 trustee’s base payment to $105 (from $45), which means that a trustee’s fee increases to $120 in total in a no-asset case (when that fee was previously $60 before the new law was passed). A no-asset Chapter 7 bankruptcy case is one in which all of the individual debtor’s assets are exempt, so there are no non-exempt assets for the trustee to liquidate in order to repay creditors. The reason for the increase in the fee was based on the Consumer Price Index and increased costs since the original fee was set.
The bankruptcy trustee’s fee in a Chapter 7 case is paid by the court, but it is ultimately paid indirectly by the debtor through the filing fee. Currently, the filing fee of $338 for an individual Chapter 7 bankruptcy case will remain the same, and the increased trustee fee will not be indirectly put on the debtor through an increased filing fee. Filing fees could be increased at a point in the future, however.
Extension of Chapter 11 Increased Fee Schedule
In 2021, the Bankruptcy Administration Improvement Act of 2020 took effect, which created an increased Chapter 11 quarterly fee schedule for large debtors. It set the maximum quarterly fee at an amount of 0.08 percent of disbursements with a $250,000 cap for quarterly disbursements of more than $1 million. That law set this fee schedule through December 31, 2025. The new Bankruptcy Administration Improvement Act of 2025 extends that quarterly fee schedule for another five years.
Large Chapter 11 debtors in Florida should be aware of the increased fees going forward.
Extension of Judgeships
The law also extends the terms for temporary bankruptcy judgeships in certain districts from five years to ten years. This aspect of the law is not something that individual or business debtors will need to pay particular attention to since it is unlikely to impact their filings.
Contact Our West Palm Beach Bankruptcy Attorneys Today
Do you have questions about how the Bankruptcy Administration Improvement Act of 2025 may have an impact on your bankruptcy filing, or do you have general questions or concerns about an individual or business bankruptcy in South Florida? An experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC, PLLC can speak with you today to answer your questions and to begin working with you on your bankruptcy case.
Source:
congress.gov/bill/119th-congress/senate-bill/3424
