If you are drowning in debt, you may be wondering about your utilities, especially if you are considering bankruptcy. Will you be able to keep the lights on? What about your home phone? How are gas and water affected?
If you are behind on your utility payments and your services may be shut off soon, bankruptcy can help you keep your power on. When you file for bankruptcy, your utility bills are treated as unsecured debts. In bankruptcy, a utility refers to essential services like electricity, gas, water, and phone service, as these are considered necessary for basic living. Cable TV and internet would not be considered utilities for this purpose.
You can opt for Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, unpaid utility bills incurred before filing can be discharged. In Chapter 13, they are included in the repayment plan.
Keep in mind that you have some protections under federal law. If you file for bankruptcy, the utility company cannot legally change, refuse, or disconnect your service. Also, utility companies cannot shut off or refuse to provide you service just because you filed for bankruptcy or were late on your payments when you filed for bankruptcy. However, any new utility charges incurred after filing must be paid on time, as they are not covered under bankruptcy.
If you decide to file bankruptcy to keep your utility services connected, you need to act quickly. You may have to file an emergency petition, which allows you to file the petition to start the process and stop the shut-off, and then file the rest of the documents within 14 days. However, you have to file the rest of the forms by the 14-day deadline. If you do not, the bankruptcy court may dismiss your case.
However, filing for bankruptcy is not enough. You must also make sure that your unpaid utility bills are listed as debts in your bankruptcy schedules. This allows the court to notify the utility company that you have filed for bankruptcy and will ensure that your services are not shut off because of your utility debts. Also, an automatic stay goes into effect, so the utility company cannot try to collect past-due utility bills by making phone calls, filing lawsuits, or harassing you in any way.
Also, within 20 days of filing bankruptcy, you must prove to the utility company that you will be able to pay future utility bills. This is called providing “adequate assurance.” You need to comply with this requirement, or the utility company can disconnect your service.
Adequate assurance may be:
- Cash deposit.
- A letter of credit.
- Certificate of deposit.
- Surety bond.
Contact Us Today
It is important to have utilities even if you are in poor financial shape. The good news is that if you have filed for bankruptcy, you have some protection.
The Law Offices of Adam M. Freiman can help you understand how bankruptcy will affect you. We can help you keep your utilities in your time of need. Schedule a consultation to learn more. Fill out the online form or give us a call at (410) 486-3500.
