Can You Claim Utility Bills in Bankruptcy?
Utility Bills and Bankruptcy can be a challenging experience, but it helps release you from most of the debts you owe to multiple creditors. Once you file for bankruptcy, all your creditors receive notice of stay against any debt collection activities.
When declaring bankruptcy, you might wonder, does bankruptcy clear all debts? You can find out the answer in one of our other articles here, but for now, let’s focus on what happens to your utility bills.
Utility Bills and Bankruptcy
Any delinquent utility bills should be considered as your debt must be added to the list when you are filing for bankruptcy. Since this debt is dischargeable, the utility company can terminate your service due to an unpaid bill. For example, if you have an old utility account from the former residence, then bankruptcy will remove the debt.
When you begin filing for bankruptcy protection, you may fall behind on your utility bills, including telephone, gas, electric, sewer, and water bills. This would mean these bills would be managed during your bankruptcy. Here are a few things you need to know:
- First, ensure the outstanding utility bills have been listed as debts in your bankruptcy. When filing for bankruptcy, you must list all your delinquent accounts, including the ones you might not think of as debts and the accounts you intend to keep paying, such as the utility bills.
- When you include utility companies as creditors in your bankruptcy, an official notice will be sent to the utility company informing them about your bankruptcy. This ensures that the company doesn’t stop the utility services because of your delinquent account before the bankruptcy.
- The “automatic stay utilities “is activated immediately when your bankruptcy gets accepted in court. Aside from certain exceptions, this automatic stay prevents the creditors from making further debt collection efforts on all the listed delinquent accounts on your bankruptcy, including the utility bills.
- Once your bankruptcy is completed, usually after 3 years and 1 day, you would be responsible for paying for your post-bankruptcy utility bills.
Business Utility Bills When You Go Bankrupt
In a business bankruptcy, insolvency, or liquidation. Once the bankruptcy has been filed and approved, the utility companies can shut off the services if the bills are unpaid.
Utility bills come under unsecured debts, which are debts that aren’t tied to a specific asset or property. Bankruptcy covers almost all of the unsecured debts, including:
- Phone, electricity, gas, water, and internet bills
- Accounting, legal & medical fees.
- Unpaid rent and overdrawn bank accounts
- Store cards and credit cards
- Unsecured payday loans and personal loans
Most of these debts do get released once the bankruptcy ends. Utility bills are treated the same as personal loans, medical bills, and credit cards in bankruptcy. However, if you managed to file for bankruptcy and your utility bill is unpaid, the bankruptcy can’t prevent the company from disconnecting your services.
Is the Utility Company Refusing or Discontinuing Service?
Where you have an old utility account, from a former residence, along with an account for your current residence, the bankruptcy will terminate the debt from the former residence. But if the existing residence account is unpaid and included in the bankruptcy, the utility provider can and often does disconnect that service.
To reconnect the service, the utility provider will generally ask for a bond to offset future losses.
Utility Bills After Bankruptcy
While the utility bills of the previous utility account get cleared in the bankruptcy after bankruptcy, all extinguished debts before the bankruptcy get cleared but must be resumed after the bankruptcy.
Provable debts are ones the creditors are entitled to get paid in dividends in the bankruptcy, while extinguishable debts are the ones the bankrupt individual doesn’t pay after bankruptcy discharge. All essential services, like TV, phone, electricity, gas, and water bills, are extinguished and provable debts.
To maintain the utility provider’s required service, you must continue making regular utility payments during and after the bankruptcy. If you neglect to make the utility payments on time, The utility provider can terminate your services based on this.
Filing a bankruptcy claim will prevent the utility company from collecting the payment for your past outstanding bills, but if you don’t pay the unpaid bill, your service could be disconnected, and the utility company might ask you to make a security deposit.
Need more information about Utility Bills and Bankruptcy? Contact Us.
“We advise that you consult with our bankruptcy consultants before making any decision about your utility bills and bankruptcy. Trust us, it’s never easy to handle the paperwork so we can ensure that the process goes smoothly and there is no added drama relating to utility companies and debt collection agencies.”
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