For many, being in debt is an incredibly overwhelming and stressful matter. Not only can it feel as though you have the weight of the world on your shoulders, but in some instances, you’ll find that the impact can be direct and immediate. For example, if you are behind on your utility bills, the company may be ready to turn your electricity and gas off. If this reflects your circumstances, you’ll want to keep reading as the following blog explores what you must know about these matters, including the importance of working with a Montgomery County bankruptcy lawyer to help you through this process.
Does Bankruptcy Prevent My Utilities From Being Shut Off?
When you make the decision to file for bankruptcy, it’s important to understand that you are granted an automatic stay. Essentially, this means that your creditors are unable to continue collection efforts against you, including wage garnishments, foreclosures, or lawsuits. Additionally, they cannot even contact you in regard to an outstanding debt in your name.
However, in some instances, the automatic stay can change based on the debt. As such, if you have outstanding utility bills, you’ll find that your utility company cannot shut off service because you decided to file for bankruptcy. However, they can request a deposit within 20 days of filing in order to continue service.
What Happens To Outstanding Utility Bills During Bankruptcy?
When you file for bankruptcy, how your utilities are handled depends on the kind of bankruptcy you’ve chosen. Generally, you’ll find that if you qualify for Chapter 7, meaning you’ve passed the means test, your non-exempt assets will be liquidated as a means of repaying your creditors. As such, this process generally only takes around six months to complete. However, you’ll also find that if you do not qualify for Chapter 7 or want to shield your assets, you may choose to file Chapter 13. This process places filers on a three- to five-year repayment plan, in which your assets will not be liquidated, and you will make a payment directly to the trustee, who then disperses it among the creditors.
If you choose to file Chapter 7, you’ll find that unsecured debts are typically discharged, including utility debts. As such, if you have decided to file Chapter 7, previous outstanding amounts will be forgiven. However, you are still liable for ensuring all bills received after filing are paid. If you choose to pursue Chapter 13, you’ll find that your outstanding utility bills can be included in your case. However, they are not a priority debt, meaning your service company will share the remainder of your disposable income with other low-priority creditors. Additionally, the remaining balance can be discharged at the end of your Chapter 13 case.
As you can see, filing for bankruptcy can be beneficial when you are in debt. However, the process can be difficult to navigate, which is why it’s in your best interest to connect with a bankruptcy lawyer with Mudrick & Zucker, P.C. Our team is committed to helping guide you through this process so you can focus on setting yourself up for success after your financial fresh start. Contact us today to learn more.
