Some of our clients are having trouble with basic expenses by the time they reach us. This can include having issues with utility bills.
Fortunately, bankruptcy is meant as a fresh start. Both Chapter 7 and Chapter 13 bankruptcy are also structured in a way that’s meant to allow day-to-day life to continue while you work to get your life back.
Can the utility companies turn off my service if I include them in bankruptcy?
Filing a bankruptcy grants you a protection called an “automatic stay.” This is the same protection that keeps creditors from continuing to hound you. It temporarily stops repossessions, foreclosures, and shut-offs. In fact, filing for bankruptcy can keep your utility services on, though we may need to file an emergency petition on your behalf. If the utility company cuts off your services in spite of the automatic stay we can contact the bankruptcy court on your behalf, so we can get the situation corrected.
However, the utility company may take your security deposit to take care of at least part of your unpaid balances. You will also have to provide some sort of “adequate assurance” your utility bills will be paid. This could be in the form of a prepayment, a cash deposit, a letter of credit, or some sort of bond. You, the trustee, and the utility company must all agree on the nature of the assurance.
The security company can say your payment assurance is not acceptable; you may need to appeal to a judge for help.
You don’t have to decide what you can offer alone—getting advice on “adequate assurances’ is one of the great things about having a bankruptcy attorney on your side.
What will happen to my utility balance after bankruptcy?
In some cases, your utility balances will all be restored to “zero” after your case is discharged, either because the trustee pays them or because the debts themselves are discharged. However, if the utility company has already filed a lien on your house bankruptcy won’t wipe out the lien. It’ll remain until it’s paid.
Hopefully the bankruptcy will help you restructure your financial life in a way that prevents your utilities from ever becoming a problem again. This might also be a good time to address your patterns of utility use, so you can keep your balances as low as possible in the future.
I’m afraid I won’t be able to get utility services after my bankruptcy.
The law prevents utility companies from discriminating against you just because you’ve filed for bankruptcy. They can’t deny services.
They can, however, ask you for a fairly hefty security deposit before they’ll start service. Make sure you call and determine how much you’ll be asked for before you try to start services at another location. Many clients end up moving or downsizing during or after their bankruptcy; it’s good to know how much money you’ll want to put aside when it’s time to start over. The security deposit is usually somewhere between $100 and $250, but it can vary.
We’re here to watch out for you!
If you’re afraid your utilities will be shut off, if you’re about to lose your house or car, or if creditors are threatening to sue it’s time to call Sadek and Cooper for your free bankruptcy consultation. We can navigate you through this trying, scary time. With our help you can face a better, brighter financial future. Contact us today.