utility bills

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.

Does Bankruptcy Affect My Utilities?

Debts owed to utilities are dischargeable through bankruptcy. This is good news for anyone facing large, past-due bills for gas, electric, cable, or cell phones. However, many of my clients considering bankruptcy are concerned that including a utility in the bankruptcy will result in the service being denied in the future.

Fortunately, the bankruptcy code prohibits a utility from denying service to bankruptcy filers. Not that they would probably even want to... most bankruptcy filers get current and stay current after filing. The utilities would be denying good customers.

However, the bankruptcy code does allow utilities to require a security deposit after filing. Most utilities in western Pennsylvania do not bother with this requirement. The lone exception is Duquesne Light. Duquesne Light will normally close out your account when a bankruptcy is filed, whether or not you have a past-due account. They will require a security deposit (sometimes rather large) for service to continue. I let my clients know beforehand so they can plan accordingly. Once again, no other utilities in western Pennsylvania require this at this time.

If you are current with your cable, cell phone, gas, or water, you can continue making payments as normal, and your service will not be affected. If you are facing a shutoff, the bankruptcy automatic stay will stop the shutoff, so sometimes it is important to act quickly.

It is always worth checking before filing a bankruptcy to see if you have older bills, especially with cell phone or cable companies. Old cell phones bills from college or earlier sometimes linger. Cable bills and expenses are sometimes forgotten after several moves, as it is easy to forget to end the service or return equipment.

Contact us to discuss your options if you have issues with old utility bills or you are facing a shutoff.