How are my utilities treated upon the filing of my bankruptcy?

THE BANKRUPTCY CODE PROVIDES PROTECTION TO THE DEBTOR FROM BEING DISCRIMINATED AGAINST BY THE UTILITY COMPANY

Having utility service is considered of utmost importance in society. If the service was ever terminated it could make a person's life somewhat miserable. In order to prevent a situation like this from occurring, the Bankruptcy Code tries to strike a middle ground between the person filing bankruptcy and the utility provider. Most people feel that a utility provider includes simply public providers of electric, gas, telephone, water and sewage services. The definition is much broader and includes suppliers of utilities such as landlords, condominium associations and other entities that may be responsible for having utilities supplied to debtors. 

 

THE DEBTOR IS FULLY PROTECTED DURING THE FIRST 20 DAYS AND MAY EXTEND SUCH PROTECTION 

A utility provider is prohibited from discontinuing or refusing services simply because a person has filed bankruptcy and has not paid a debt that existed prior to the bankruptcy filing. During the first 20 days a debtor is protected from their service being terminated. The utility company, however, can require a deposit or an adequate assurance of future payments. The amount of the deposit is based on a person's prior usage and varies. A good estimate is about two monthly budget payments. There are normally only two utility providers in this district that require a deposit, the electric and the gas. Upon receiving the deposit, any pre-bankruptcy debts would be wiped and a new account would be opened with a zero balance. During the 20 day period, the debtor may file an action in court seeking to have the amount of the deposit modified or allowing it to be paid in installments. The utility providers are not without options if a person does not pay the deposit within the 20 day period nor have the time period extended. The utility company may terminate or refuse service after the 20 day period. 

 

YOUR UTILITY SERVICE MAY HAVE ALREADY BEEN TERMINATED BUT RESTORATION OF SUCH SERVICE IS REQUIRED 

Sometimes a person's utility service has already been terminated prior to their filing for bankruptcy. The Bankruptcy Code requies that the utility provider restore service upon the filing of the bankruptcy case. The utility company can require a deposit or some form of adequate assurance of future payments, within the 20 day period from the filing of the bankruptcy. The adequate assurance requirements may be somewhat different from a person who already has service, since restoring service basically makes a person a new customer and the adequate assuance requirments for this type pf person could be different.

 

WAIVER OF THE REQUIREMENT OF THE DEPOSIT MAY BE A REAL POSSIBILITY

There are situations where a person has always paid their utilities. Even under these type of circumstances the utility company still expects that a person pay a deposit. However, if the debtor has a past payment history showing that payments have always been made on a timely basis, then it is possible that the utility company will waive this requirement. The payment history should serve as a type of adequate assurance. Debtor's counsel should contact the attorney for the utility company and bring to his or her attention the debtor's past payment history to see whether the waiver requirements are met.