filing bankruptcy utility billsYou’re behind on the light bill, or maybe the cable. You’re thinking about filing for bankruptcy to get rid of those debts and start over, but you don’t relish the thought of being without utility service. What’s the solution?

Remember that the automatic stay prevents creditors from trying to collect debts you owed prior to filing bankruptcy. Utility bills, however, are treated differently in the bankruptcy system as a way of protecting you as well as the utility company.

Maintaining Service After The Bankruptcy Is Filed

Under Section 366 of the U.S. Bankruptcy Code, utility companies are given some options. Under the law, utility companies have the right to demand what’s called “adequate assurance of payment”.

In other words, the company can require you to give a security deposit in order to keep services running. You’ll usually be required to make this payment within 20 days of the date you file for bankruptcy or risk getting service shut off.

Re-Establishing Utility Service After Shut-Off

If your service was shut off before you filed your bankruptcy case, you’ll need to provide the company with proof of your filing. Once that’s done, the utility company is required to turn service back on. You’ll still need to provide a deposit but at least the lights will come on again.

Fall Behind After Your Bankruptcy Is Filed?

A utility provider generally can terminate your service if you fail to pay your post-petition utility bills. If you fall behind after your Chapter 7 bankruptcy case is filed, you’re going to need to look into a Chapter 13 to repay the debt in full or risk losing service.

The Good News

Once the deposit is paid your service should continue uninterrupted. The pre-bankruptcy debt will be discharged in a Chapter 7 and you’ll start over with a $0 balance.

Even with a security deposit, you’re going to be able to walk away from a significant debt.

Image credit:  anthonystoro