When you file for bankruptcy and an automatic stay is issued, that can put a stop to a lot of creditor activity. This can include any utility companies that you owe money to. Threatened utility shutoffs can be prevented by meeting with a Montgomery County bankruptcy lawyer and filing for bankruptcy. This automatic stay cannot protect you forever though.
Which Type of Bankruptcy Can Prevent Utility Shutoffs?
Both types of bankruptcy commonly used by individuals can be used to put a stop to utility shutoffs, at least in the short term. The automatic stay prevents them from cutting off your power or water. However, this does not give you license to just ignore the utility companies as you go through the bankruptcy process.
This is because they are going to want something from you. They are going to need “adequate assurance” that you will pay them. You have 20 days to make your case.
What Do I Have to Do to Stop Utility Shutoffs After Filing?
The next step is showing the utility companies that you will be able to pay future bills. This is important. It’s the future bills that matter because you are presumably addressing past bills through your bankruptcy proceedings.
What qualifies as adequate assurance can vary from company to company. People usually use a letter of credit, a surety bond, or a certificate of deposit to show that they will be able to make future payments. Some companies might also let you place down a cash deposit. If you meet their standards, attempts at utility shutoffs should stop.
Will My Past Debts to the Utility Company Be Paid Off in Bankruptcy?
Your past debts to the utility companies will be addressed in one of two ways. If you have chosen Chapter 7 bankruptcy, many of your assets will be sold off and the proceeds will be used to pay off creditors. If you instead opted for Chapter 13 bankruptcy, you will work out a payment plan for your debts, including past-due utility bills. You will then make payments for three to five years, and then you’ll get your new financial start after you have made all of your payments.
What’s important is continuing to pay your utility bills that accumulate after filing for bankruptcy. If you do not, utility companies can shut off the services they are providing to you. Filing for bankruptcy can only address your debts up until that point. If you accumulate more debt because of past-due payments, that is on you.
Talk to a Bankruptcy Lawyer
When you want to learn more about the potential benefits of bankruptcy and whether it’s the right option for you, contact Mudrick & Zucker. We can schedule a consultation and help you get closer to that fresh financial start.
