Utility Bills and Bankruptcy
Often, you can file bankruptcy at your own pace. Whenever you’re ready and feel the time is right, you can file your case. But sometimes, you don’t have that luxury. Sometimes, there is an emergency that requires that you file a bankruptcy right away. One example of that situation is when you are facing the shutoff of utilities.
The good news is that upon your filing of a bankruptcy, the utility company must keep your service running. In that way, utilities operate much the same as other creditors, who are forbidden from taking any collection actions against you once your case is filed because of the automatic stay.
But utilities do have one different aspect to them—they only have to keep the utilities on and running for 20 days after you file the case (this is, of course, assuming you are delinquent in your utility bills—if you are current, they have to keep the utilities running so long as you keep paying, like normal).
And don’t worry if you are current with utilities—it is illegal for companies to shut off utilities, or punish you, just because you filed for bankruptcy. So, filing your bankruptcy won’t affect your utilities at all, assuming you aren’t behind in payments.
Before the 20 days is up, you must demonstrate “adequate assurance” that you can make payment to the utility company. This may be in the form of a deposit, advance payment or a letter of credit. If you provide such proof, your utilities must remain on—even if your bankruptcy includes back owed utility bills.
In other words, even if you are discharging (or seeking to discharge) a utility bill in the bankruptcy case, the utility must be kept on, so long as you show or provide the needed assurance within the 20 days.
Assuming you make the assurance payment, keep paying the utilities timely going forward, and obtain your bankruptcy discharge, the back owed utility bills will be wiped out.
Renewed Delinquency Date
The utility company also must only count you as delinquent starting on the day of the bankruptcy, if you do not pay.
For example, assume that the utility company shuts off power in 90 days. You stopped paying January 1. Normally, your power would be shut off around April 1. But if you filed for bankruptcy on March 1, and never paid again, the power would remain on until June 1—90 days after you filed the bankruptcy—not 90 days after your last payment.
Prior Shut Offs
The problem comes if your utilities have already been shut off. There is no legal requirement for a utility company to turn your utilities back on, once you file for a bankruptcy, which is a good reason to file as soon as possible if you suspect that you will be or are falling behind with utility bill payments.