On February 6, 2026, President Trump, after near unanimous support by the U.S. Senate and the U.S. House of Representatives, signed into law the Bankruptcy Administration Improvement Act of 2025 (the “Act”), which was long overdue. Additionally, the Act extended temporary bankruptcy judgeships for five more years.
The Act amends the Bankruptcy Code and doubles the flat fee Chapter 7 trustees typically received for the administration of bankruptcy liquidations, from $60 to $120, in no-asset cases. In no-asset cases, a debtor has no non-exempt property for the Chapter 7 trustee to liquidate, which resulted in the Chapter 7 trustee earning no commission, beyond the flat fee. This increase of compensation was intended to strengthen the bankruptcy system and fairly compensate Chapter 7 trustees, while ensuring the system remains fully self-funded without burdening taxpayers. Moreover, the Act was intended to improve Chapter 7 trustee retention.
A Chapter 7 trustee is a vital part of the bankruptcy liquidation process for all creditors. Chapter 7 trustees are impartial individuals who manage a debtor’s assets and facilitate the distribution of available funds to creditors through a liquidation process. Chapter 7 trustees investigate financial affairs and review creditor claims, among other duties. By doubling the fee, the Act will likely result in more experienced professionals being motivated to serve as Chapter 7 trustees, and it may lead to improved trustee oversight of Chapter 7 cases, faster resolutions, and more consistent case management.
The revised fee structure will take effect April 1, 2026[1].
[1] NTD: This assumes the Act will be enacted in the first quarter of the year. The bill provides that the Act “shall take effect on the first day of the calendar quarter that first occurs on or after the date of enactment of this Act.”
