What Happens to Utility Bills in Bankruptcy?
When debts pile up, it can become overwhelming to pay any bills. And during the summer especially, Arizona utility bills can be astronomical. And because utilities are very important, you may wonder what will happen to your service if you file a bankruptcy petition. Will you still have utility services after filing for bankruptcy?
Section 366 of the Bankruptcy Code governs utility bill debt obligations, and what happens to them in Chapter 7 and 13 bankruptcy.
Generally, filing for bankruptcy triggers protection from the automatic stay, which prevents any creditors from trying to collect on debt. There are very few exceptions to this rule, but one of them is for utility companies.
Except for a few limited exceptions, utility companies cannot “alter, refuse, or discontinue service” to those who have filed for bankruptcy solely because they filed. Note that this does not protect a debtor from being discriminated against for several reasons, one of which is their bankruptcy filing.
However, if within 20 days of an order for relief, the debtor has not given adequate assurance of payment, such as a deposit, the utility may refuse, alter, or discontinue service. If this is not possible for you, you may be able to seek some relief from the bankruptcy court, such as permission to give a lower deposit.
These issues are complicated, and only an experienced bankruptcy attorney can answer your questions fully. Speak to a professional about your specific circumstances before you make any decisions about your bankruptcy case.