Utility Disconnections and Bankruptcy
While Chapter 7 bankruptcy can help you eliminate unsecured debt, it may also help you keep your utilities from getting disconnected. In most cases, bankruptcy will prevent utilities such as electric, water, phone and gas from being shut-off. The automatic stay that goes into effect after you file may give you additional time to come up with a solution to keep your utilities connected.
Rules and regulations in bankruptcy state that once a debtor begins the filing process, utility providers are prohibited from disconnecting, making changes to or refusing services due to your bankruptcy, especially if back payments owed will be discharged. While the utility disconnection is put on hold, there is another task that needs to be completed by the debtor to avoid disconnection and that is to provide adequate assurance.
You’ll have to provide assurance to the utility company within 20 days of your filing. This means you will provide information to the company to ensure you’ll be able to make future utility payments. Failing to provide those details can result in having your services shut-off. It’s important to try and work out an agreement with the utility company because jurisdictions operate differently and some may let a utility company disconnect after 20 days without additional court permission. If you are unable to provide assurance within 20 days, you may need to seek court intervention to maintain your services while working on an agreement.
Adequate assurance may include making a cash deposit, prepaying for future service, a letter of credit or anything that is an acceptable form of security between the utility company, you or your bankruptcy trustee.
There are other options to consider such as discount programs that are offered by the state or the utility company. In some cases, you can file an emergency bankruptcy if the shut-off is imminent. Review questions and concerns with your Dallas bankruptcy lawyer .