Past-Due Utility Bills and Bankruptcy
Sometimes you fall behind on utility bills such as a water bill or electric bill. You may even be on a budget plan as a result of this, which causes your monthly utility bills to be higher than your actual usage. If you fall far enough behind on your utility bills you may receive a shutoff notice stating the date you must pay or else the utility provider will shut off your access to the utility.
When you file for bankruptcy, there is an automatic stay which goes into effect. For more information about the automatic stay see my article entitled, “How Does Filing For Bankruptcy Stop My Creditors?” If you file for bankruptcy before your utility is shut off, the automatic stay will keep the utility from being shut off. If you wait until your utility is shut off before you file for bankruptcy, it can take anywhere from hours to several days to restore the utility service. The best thing to do is file for bankruptcy before the situation has proceeded to the stage where you receive a shutoff notice.
When you file for bankruptcy on past-due utility bills the utility will close the account, issue you a new account, and charge you a deposit. Filing for bankruptcy will address your past-due utility bills, but you must pay for your ongoing usage moving forward. In a Chapter 7 bankruptcy the past-due charges will be discharged. In a Chapter 13 bankruptcy you will pay a percentage of the past-due charges, and the rest will be discharged. For an explanation of Chapter 7 bankruptcy and Chapter 13 bankruptcy see my article entitled, “The Difference Between Chapter 7 and Chapter 13, and Which One Is Right For You.”
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.
By: Michael Benkstein, Esq.
Managing Attorney, Bankruptcy Department