In many cases, a person filing for bankruptcy might have fallen behind on his or her utility bills, which can include electric, gas, telephone, sewer, or water bills. As a result, many individuals are often left wondering how utility bills should be handled after they declare bankruptcy. This article will explain some important details about the bankruptcy process and your utility bills.
Automatic Stays in Bankruptcy
After initiating the bankruptcy process, a person needs to make sure that utility bills are listed as debts in his or her bankruptcy schedule. These schedules must list all delinquent accounts including utility debts that are owed and accounts that a person intends to keep paying. All companies included in the bankruptcy schedule will then receive notice that the person has filed for bankruptcy protection. As a result of these notices, the utility company is not permitted to discontinue a person’s utility services. Due to the automatic stay that is created when a person files a bankruptcy petition, all efforts by utility companies and associated collectors are prohibited. These efforts can include bills, lawsuits, or phone calls. Despite this protection, however, a person will be required to pay new bills that arise after filing for bankruptcy. A utility company is able to collect on these new charges.
Utilities in the Bankruptcy Code
In addition to protection offered by these stays, the bankruptcy code has a section that specifically applies to utility companies. This section states that utility companies are not permitted to discontinue utility services or refuse utility services because a person files for bankruptcy. If a bankruptcy case proceeds smoothly, a person’s utility-related debt will either be paid by the bankruptcy trustee or eliminated by discharge injunctions issued by the court.
The Role of Security Deposits for Utility Services in Bankruptcy Cases
There are some distinct exceptions to the bankruptcy code section concerning utility bills. If an individual made a pre-bankruptcy security deposit with a utility company, the utility company is able to use this deposit to pay any past due amounts that the individual has. Bankruptcy law also permits utility companies to require a person to submit a security deposit or other assurance of payment after a person has declared bankruptcy. If a person does not submit this deposit, a utility company is permitted to terminate an individual’s utility services. While there are no laws specifying how much this amount must be, companies frequently charge approximately double a person’s average monthly utility bill. If a person is unable to afford this deposit amount, individuals are able to ask a court to reduce the deposit amount. A seasoned attorney can help individuals file these motions requesting reduced deposit amounts for utility services. Utility companies rarely demand deposits from individuals, but it is critical that a person understand the importance of these deposits if a person declares bankruptcy. If a person is current on utility accounts or if a person has outstanding debts with a utility company that he or she no longer uses, utility deposits may not be a problem.
Obtain the Assistance of a Skilled Attorney
If you are considering filing for bankruptcy and have questions about the bankruptcy process, obtain the assistance of a skilled attorney. Do not hesitate to contact a knowledgeable bankruptcy lawyer like Jim A. Lyon today.