- Utilities and Bankruptcy
- January 4, 2019
The Bankruptcy Code prevents utility companies from altering, disconnecting, or refusing service to a customer because of a bankruptcy filing. Additionally, utility companies are prohibited from refusing to provide services to a customer because of an unpaid debt that may be discharged in bankruptcy. Although those provisions are in place, the Bankruptcy Code does not specify what is considered a utility. Providers of electricity, natural gas, and water are generally accepted as utility companies. Cable and cell phone providers are not generally considered utility companies.
If you have outstanding utility bills at the time of your bankruptcy filing, make sure those utility companies are listed as creditors in your case. This will ensure that each utility company receives notice of your bankruptcy filing, which may prevent a disruption in those services. If you are facing an immediate disconnection of services at the time of your bankruptcy filing, let your attorney know so that they can file an emergency petition, which may prevent a disconnection of services. If your services have already been disconnected, a bankruptcy should help you get those utility services restored, but there may be a reconnection fee. To avoid the reconnection fee and the overall hassle of a disruption in utility services, you should file your bankruptcy case prior to any disconnection of services if possible.
Prepetition utility service debts are generally dischargeable in bankruptcy, but any security deposit you provided to the utility company will be applied to the unpaid balance. Typically, the utility company will close the prepetition account, and open a new account with a new account number. You must pay all new utility charges for services provided after the bankruptcy filing, or you risk disconnection of services.
The utility company may request that you provide adequate assurance of future payment, which is generally provided in the form of a security deposit. The amount of the requested security deposit varies but is often between $100.00 – $350.00 depending on your average utility bill. If you do not provide the requested adequate assurance, the utility company may disconnect your service.
If you are facing a utility shutoff or have questions about utilities and bankruptcy, please give us a call at 412.261.1600 to set up your free consultation.