If you’re considering bankruptcy, you’ve probably realized by now that it’s not as simple as wiping your slate completely clean and starting over. While you’re focusing on repairing your financial life, you also have to be conscientious of the effects bankruptcy will have on the other aspects of your life, as well as the lives of your family and loved ones. For many, this may mean trying to save a house from foreclosure or a vehicle from repossession. While bankruptcy is a life-altering event, there are common-sense laws and process in place so that individuals can still maintain some level of normalcy in their lives.
One question we often hear from clients is in regards to their utilities – heating/cooling, power, water, etc. If the power company sees that I’m filing a bankruptcy, will they cut me off? If I’m late on my payments and a bankruptcy wipes away those old debts, will they keep me as a customer? It’s easy to see how this conflict would cause some friction between these companies and their customers. Luckily, bankruptcy code has a special section that deals specifically with utility services and bankruptcy. The short answer to all of these questions is no – your utilities cannot legally be shut off just because you are filing for bankruptcy. This is good news, especially during Iowa’s frigid winter months!
If you have late payments owed to a utility company, you can get them discharged in bankruptcy. It is very important that when you file for bankruptcy, you list these past bills as debts in your bankruptcy schedules. This informs the company that you have filed for bankruptcy, and therefore they can no longer call or otherwise demand you make your late payments. At this point, you are free of these past payments and they are no longer your responsibility, which can be a great relief.
That being said, your utility bills are not just something you can continually ignore without repercussions. After a bankruptcy is completed, you are back on a level playing field with the utility company. From that point forward, you are one hundred percent responsible for any and all payments for utility services. If after 20 days from the date of your bankruptcy’s completion you cannot make a deposit or “furnish adequate assurance of payment,” as bankruptcy code puts it, the company has the right to discontinue your services.
As it pertains to utilities, the “point” of bankruptcy is wipe away old, piled-up missed payments to make new payments more manageable and financially realistic. The solid footing and fresh start that bankruptcy provide for a healthy financial future, but it’s only effective if you make your utility payments and avoid the same pitfalls that brought you to bankruptcy in the first place.