Bankruptcy protects against utilities being shut off

Are you worried that if you file for bankruptcy protection, you’ll find yourself in a home with no electricity, water, or heat? The truth is that bankruptcy protection stops utility shutoffs, and gives the debtor some time to breathe. It’s not very much time, but if you work with a seasoned bankruptcy attorney who understands all the rules, you’ll have a much better chance of keeping the lights on long-term than if you go it alone.

The law prevents utility shutoffs for 20 days after a bankruptcy petition is filed. That’s separate from the automatic stay, which blocks any attempts to collect on old utility bills, and usually lasts until the case is discharged. In a chapter 7 bankruptcy, utility bills are the kind of debt that is routinely discharged, which means that you will never have to pay those off.

When a utility has already been shut off due to nonpayment, on the other hand, then once a bankruptcy is filed then you’re essentially a new client. You cannot be asked to pay what you previously owed, but a reconnection fee and possibly a deposit should be expected to resume service.

If you want to continue enjoying running water, electricity, and other utilities, you will have to provide what’s called an “assurance of payment” to keep your account open, or to get them reestablished if a shutoff already occurred. A deposit might be required, for example, or you may have to prepay your utilities for a time. When I work with clients, I help them work out a budget to prevent them from being in the terrible position of not being able to pay for basic utilities going forward.

Bankruptcy protection can make the difference between a long winter, and one that is long, cold, and dark. FIf you wish a free consultation about your personal situation, contact me to discuss your options.