Utilities and Bankruptcy

Most utility bills are dischargeable in bankruptcy. That is the good news. Balances owed on electricity, gas, water, sewage, and cable can all be wiped out. However, depending on the utility and the situation, certain issues could pop up. It is worth discussing, because utility bills are a major part of bankruptcy filings.

Duquesne Light is the major provider of electricity in western Pennsylvania. Balances owed to Duquesne Light can always be discharged in bankruptcy as unsecured. Also, like other utilities, shut-off notices can be stopped under the bankruptcy "automatic stay". This is very important if a shut-off notice is imminent. Bankruptcy can literally keep the lights on in your home. So, if you are behind on your electricity bill (whether or not it is Duquesne Light) let your attorney know!

One other important detail about Duquesne Light... if you do include their bill in your bankruptcy petition, they (and other utilities) are allowed under the bankruptcy code to require that you put down a security deposit before getting future service. The good news is they are not allowed to deny service because you discharged their balance in bankruptcy (under the same section of the code), but the trade-off is this deposit requirement. It is worth noting because the amount can sometimes reach several hundred dollars, so it can require some planning in a tight budget.

What about other utilities, such as gas, water, and sewage? They are also dischargeable. However, there is an important distinction between electricity and gas on the one hand, and water, sewage, and garbage collection on the other. Electricity and gas are unsecured, and do not become liens against your home. Water, sewage, and garbage can all become secured liens. That is, you will need to repay those utilities if you want to keep your home. If you are surrendering your home, it is no big deal... those liens will be on the home, not you. However, if you want to keep your home, you will need to plan on paying the balances off. Otherwise, the garbage, sewage, and water company can put a lien on your home and sell it off from under you!

You should always discuss your utility situation with your bankruptcy attorney. He or she can let you know what can be wiped out, and whether you should expedite the case to stop a shut-off. Your attorney can also help you plan for any required security deposits. Contact us if you are considering filing bankruptcy and are having issues with your utility bills.