If you’re struggling with unmanageable debts, you might consider filing for bankruptcy. But you may also have questions about the practical effects – particularly when it comes to bankruptcy and utility bills.
So what happens to the utility bill debt you owe? And can utility bills be included in Chapter 7 or Chapter 13 bankruptcies? The answers to those questions depend on several factors, including what chapter you file under.
What Happens to Past-Due Utility Bills in Bankruptcy?
Past-due utility bills are unsecured debts – debts you owe that aren’t tied to collateral. There are no physical items for your creditor to take possession of if you don’t pay these debts. Unsecured debts are the opposite of secured debts, such as mortgages and auto loans backed by collateral like homes and vehicles. If you fail to pay your loans for secured debts, your lender can take away the collateral – for example, by foreclosing on your house or repossessing your car.
Unsecured debts can be discharged under both Chapter 7 and Chapter 13 bankruptcy. However, each chapter’s process – and what that means for the filer – varies considerably.
How Are Utility Bills Treated in Chapter 7?
In a Chapter 7 bankruptcy, your non-exempt possessions are liquidated to pay off your unsecured debts. Creditors of secured debt can also take back the collateral in your possession. Any debt left over – including your utility debt – is discharged, meaning you no longer have to pay it.
However, you must pay your new monthly bills throughout the process to retain service. The utility company can also require you to provide “adequate assurance of payment,” such as prepayment for service or cash deposits.
How Are Utility Bills Treated in Chapter 13?
When you file for Chapter 13 bankruptcy, you create a three- to five-year repayment plan to pay back some or all of your debts – including unsecured debts like past-due utility bills. During your repayment plan, you must make regular payments to a bankruptcy trustee. The trustee then distributes the money to your creditors, including utility companies. You might not need to repay 100 percent of your past-due utility bills or other unsecured debts during Chapter 13. However, these debts will not be fully discharged unless you complete your court-approved repayment plan.
As with Chapter 7, you will need to pay your current utility bills throughout the bankruptcy process to keep your service.
Can You Still Get Services from Utility Companies that You Owe?
In most cases, you can still receive services from utility companies even if you owe them money – if you can pay your monthly bills after filing for bankruptcy. The utility company is required to treat you as though you are a new customer. They also can’t try to collect past debts while you are in bankruptcy.
Contact an Experienced Bankruptcy Lawyer in Fort Lauderdale Today
Are you interested in making a fresh financial start through bankruptcy? If so, the Fort Lauderdale bankruptcy attorneys at Loan Lawyers are ready to provide the support and guidance you need. Contact our Florida bankruptcy attorney now to discuss the specifics of your situation in a free case review.
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Loan Lawyers is made up of experienced consumer rights attorneys who use every available resource to develop comprehensive debt solution strategies. Our goal is to take on those burdens, resolve those problems, and allow our clients to sleep soundly knowing they are on the path to a better future.
