Personal Bankruptcy and Your Utility Bills

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Filing for personal bankruptcy can include utility bills. The U.S. Bankruptcy court recognizes that people facing gas, water, electric or telephone disconnection can’t just go to another public utility company for new service. So under the Bankruptcy Abuse & Prevention & Consumer Protection Act of 2005, public utility companies can’t discontinue, stop, refuse or alter service because people have filed bankruptcy, according to the Law Offices of RJ Atkinson.

Personal bankruptcy includes filing for chapter 7 or chapter 13. Chapter 7 provides people who can’t pay their debts financial freedom. Chapter 13 helps people with regular income repay their creditors over time. Typically, people under chapter 13 repay their debts in three to five years while keeping their current bills paid and saving their homes.  

An Automatic Stay Can Keep Public Utility Companies at Bay

People with overwhelming utility bills can stop pending disconnection by filing personal bankruptcy. By filing personal bankruptcy, people receive what’s called an automatic stay. This stay prevents creditors such as utility companies from disconnecting services. However, there are utility companies that are not included in the automatic stay. These companies include cellular, Internet and cable services because there is more than one company offering services.   

Public Utilities Can Be Restored

Filing personal bankruptcy restores utilities that were turned off because of non-payments. This mean that people can include their utility bills in their personal bankruptcy and have the public utility companies will restore services. Often the utility bills will begin from the date people file their personal bankruptcy. The back utility bills are included in the bankruptcy discharge under chapter 7 or the repayments in chapter 13.

Public Utility Companies Expect Deposits

Under bankruptcy, public utility companies can require people to pay a deposit. Typically, these companies require the payment within 20 days of filing personal bankruptcy. The deposit ensures the continuation of utility services. If people fail to pay the deposit within that time period, utility companies can seek relief from the automatic stay and turn off service.

Talk to a Lawyer

Bankruptcy lawyers can instruct people on which personal bankruptcy such as chapter 7 or 13 that they need to file. Also, lawyers provide advice for people overwhelmed with debt and can tell of emergency bankruptcy options. For instance, lawyers contact public utility companies to notify them when people have filed personal bankruptcy so they can turn on terminated services.