If you have concerns about paying your utility bills on time, you likely wonder how you could stop a possible shutoff. Since utilities count as unsecured debts, you are allowed to list them on a Chapter 7 bankruptcy filing, which allows you to dismiss unsecured debts by selling assets through a trustee. Depending on where you live, utilities commonly include water, gas, power, and sewage. Here are some tips for using bankruptcy to avoid utility shutoffs.
File Your Petition
All bankruptcy cases start with filing a petition with your court listing your debts. You must include a list of all of your past due bills, or the utility company will proceed with the shutoff. The court will use this form to determine if you qualify for Chapter 7 bankruptcy.
Once you get approved, bankruptcy code 11 U.S.C 366 applies, which means the utility company cannot shut off your services, change your service or refuse service. This code is similar to the automatic stay for creditors, which prohibits them from suing or harassing you over debt. If the utility company has already cut off your service, they will be required to turn it back on.
If you can't get approved for Chapter 7 bankruptcy, file for Chapter 13 bankruptcy. Chapter 13 bankruptcy creates a payment plan to pay off debts. Past due utility bills count as unsecured debt under Chapter 13, and you must keep current with recent utility bills. You also won't be able to include partially paid bills on a bankruptcy petition.
Present Adequate Assurance of Payment
Filing bankruptcy will only stop the shutoff for twenty days. Under the 366c Code, you must provide adequate assurance of payment to the utility company, like a letter of credit, surety bond, prepayment, or a cash deposit to ensure you can pay after 20 days, and make future payments. The utility company must agree with the form of adequate assurance payment.
Check Shutoff Laws in Your State
Before you file for bankruptcy, check the utility shutoff laws in your state. In some states, utility companies are prohibited from shutting off power or gas in severe heat or cold, or they may have hardship laws prohibiting them from shutting off service.
For example, in Minnesota, it is illegal to shut off power when an extreme heat or cold advisory is issued. In several states, you can avoid a shutoff by declaring a hardship before the bill is due with a down payment, or declaring a medical emergency by issuing a certificate from you doctor.
Bankruptcy is a sensible solution when you get threatened with utility shutoffs, but keep in mind you will still have to pay the bill. Talk to a bankruptcy lawyer to discuss your options.