You may have fallen behind on your bill payments if you are experiencing financial troubles. You’re probably wondering what will happen to your outstanding utility bills and whether your utilities will be disconnected if you declare bankruptcy. The bankruptcy attorneys at Fair Free Legal Services are here to assist you.
Do I Need to Include Utilities in My Bankruptcy Filing?
When you declare bankruptcy, you must submit any past-due electric bills. Unpaid utilities are deemed a debt and must be mentioned in the bankruptcy filing. The utility company will be notified that you have filed for bankruptcy, and they will be unable to disconnect your services due to the pre-bankruptcy debt. There are, however, a few exceptions.
Section 366 of the Bankruptcy Law prevents a utility supplier from changing, denying, or canceling service because a consumer files for bankruptcy, even if the customer owes money. However, if the debtor fails to pay a deposit in 20 days of initiating the action, the provider may terminate service. The utility company may potentially utilize a security deposit provided by the debtor prior to entering bankruptcy to settle the overdue account.
Because the utility provider may ask for a deposit, owing a past due utility payment is typically inconvenient if you desire future service. However, there is some safety in bankruptcy.
What Happens to Utility Bills in a Chapter 7 Bankruptcy?
Utility bills are considered unsecured obligations in bankruptcy under Chapter 7 and will be treated similarly to other obligations in this group, like personal loans, medical bills, and credit cards. The bankruptcy will cover all of the past-due utility payments up to the day you filed. When you apply for Chapter 7, most forms of unsecured debt are dismissed. This implies that any outstanding utility obligations will most likely be discharged at the conclusion of your bankruptcy.
What Happens to Utility Bills in a Chapter 7 Bankruptcy?
Like in Chapter 7, utilities are deemed unsecured debts in a Chapter 13 bankruptcy, as are any past-due payments. In Chapter 13 bankruptcy, however, unlike Chapter 7, a repayment program will be settled upon to pay off your obligations. Depending on the program and the amount you can afford, you may be able to discharge all or a percentage of your utility debt during your bankruptcy. Although discharge is not assured, all outstanding debts at the completion of your bankruptcy under Chapter 13 are usually discharged.
What Happens to My Utility Bills After I File for Bankruptcy?
It’s critical to remember that existing and future power bills will not be canceled during your bankruptcy. After filing, you must keep making payments to avoid future disconnection. As long as you make your payments on time, you should be able to continue receiving service from the same provider.
While the law is usually clear on your options for dealing with utility bills in bankruptcy, the best course of action for you will depend on the kind of bankruptcy you declare, the amount due on your utilities, and the creditors involved in the bankruptcy proceedings. To fully understand your alternatives moving forward, consulting with an expert bankruptcy attorney about your specific case is important. Contact Fair Free Legal Services if you have a specific debt problem or legal query.