Bankruptcy and Utility Bills
When you file Chapter 7 bankruptcy, there are many protections that you get as soon as you file. Certain creditors are not allowed to pursue you for debts, and some — if not all — of your debts can be discharged through the process.
One question that many people have about Chapter 7 bankruptcy is how utility bills are handled. Let’s dive deeper into this topic below.
Understanding Bankruptcy and Utilities
Just like other outstanding debts that you may have, overdue utility bills can be discharged through Chapter 7 bankruptcy. That’s because most unsecured debts can be completely wiped out through this bankruptcy process.
Handling Utility Bills in Chapter 7 Bankruptcy
Under Chapter 7 bankruptcy laws, utility bills are clumped under the unsecured debt umbrella. This puts them in the same category as credit cards and personal loans. As such, they can be discharged through the process of bankruptcy.
Chapter 7 Impact on Utility Bills
While Chapter 7 bankruptcy is proceeding, you will still incur normal charges on your utility bills. Those bills can also be discharged if they are incurred before the bankruptcy closes.
Outcome of Overdue Utility Bills Post-Bankruptcy
The bankruptcy process will discharge overdue utility bills that you have incurred and included in the filing. Once the bankruptcy process is over, though, you must resume your payments of utilities. Bankruptcy doesn’t do anything to discharge future payments.
Immediate Effects of Bankruptcy Filing
There are federal protections in place for people who file Chapter 7 bankruptcy. Utility companies are not able to change, refuse or disconnect service once you’ve filed bankruptcy. They also can’t refuse to provide you services or shut you off just because you filed for bankruptcy.
You may need to file an emergency petition to ensure that your utility services remain connected as you file bankruptcy, though. This will allow you to start the petition process so utility shut-offs can be prevented, and then proceed with filing the remainder of the necessary documents at a later time.
Bankruptcy’s 20-Day Utility Shut-Off Protection
After the bankruptcy filing has been completed, you will have 20 days to make a security deposit with your utility company. If that deposit isn’t paid within that time, then the utility company can shut off your service. In many cases, though, the utility company could extend that deadline.
Post-Bankruptcy Utility Service Continuation
Once the bankruptcy process has ended, the utility company will use your security deposit to open a new account for you. You will then pay under this new account and will have to abide by all the rules for paying to avoid having your service shut off.
Deadline for Utility Disconnection After Bankruptcy
Once bankruptcy has ended, your relationship with utility companies will revert to how it was before. You will pay for your service on a monthly or quarterly basis — depending on the company — and will need to do so to avoid your service being cut off.
Navigating Post-Filing Requirements
Filing bankruptcy doesn’t fully protect you from utility bills, in and of itself. There are some other steps you must take to ensure that your services aren’t shut off.
How to pay past due utility bills in bankruptcy
Past due utility bills can get discharged through bankruptcy, but only if you listed them as debits in the bankruptcy schedules. By doing so, you’ll be ensuring that the court notifies the utility company that you’ve filed bankruptcy, which ensures your services aren’t shut off.
Ensuring Utility Payment in Bankruptcy
In bankruptcy, you will still have to pay for any current or future utility bills you incur. Bankruptcy can only discharge any previous past due bills you have.
As mentioned before, you will have 20 days from filing to prove to the utility company that you can pay future bills, by providing them with “adequate assurance.” If you don’t provide this, then the utility company could disconnect your service, even if all your past due payments are discharged by bankruptcy.
Handling Inadequate Assurance for Utilities
When you provide documents to the utility company, it’s still possible they may not believe that your assurance is adequate enough. If you can’t come to an agreement on this with the utility company, you can file to ask the bankruptcy judge to force the utility company to accept the payment assurance you provided.
It’s possible for the judge to order that the deposit amount be modified as a result of findings.
How to Pay Future Utility Bills in Bankruptcy
All future utility bills must be paid as normal during and after bankruptcy. That’s because bankruptcy can only discharge past overdue bills.
Legal Representation and Bankruptcy
If you are considering filing bankruptcy, it’s essential that you hire an experienced law firm to help guide you through the process. Trying to navigate bankruptcy on your own is generally not a good idea, as you may not be overlooking some aspects of the process that would work to your disadvantage.
Advantages of a Bankruptcy Lawyer
One of the biggest advantages a bankruptcy lawyer can provide is defending your petition. While you will gain protection from debt collectors and creditors by filing bankruptcy, they can challenge your petition or the payment plan you have proposed.
Bankruptcy attorneys can also bring you peace of mind as you go through what can be a complicated process. Most people who aren’t educated on how bankruptcy works could easily become confused and may miss important deadlines or steps.
Importance of Legal Assistance in Bankruptcy
Having an experienced attorney on your side, like the ones at Babi Legal, is essential when you file bankruptcy. Having legal assistance is so important as there are many intricacies of the bankruptcy system that would be tough for the everyday person to understand.
An experienced bankruptcy lawyer can help you file all the appropriate paperwork on time, and help you minimize mistakes, which could be extremely costly.
Rights and Protections Under Bankruptcy
When you file Chapter 7 bankruptcy, a utility company is prohibited from refusing, disconnecting or changing your service. They also can’t shut off your service or refuse
to provide service to you simply because you filed bankruptcy.
Utility Access During Bankruptcy
To continue to gain access to utilities during bankruptcy, you will have to provide adequate assurance to the company that you can pay future bills. This may involve you submitting documentation as well as a security deposit.
