Utilities in Bankruptcy
Will Filing Bankruptcy Cut Off My Utilities?
Short answer: No.
BUT – If you want to keep the lights on and the water running, you will have to catch up the bills. Unpaid utility bills are regular old unsecured debts – they can be discharged like any other – but the Bankruptcy Code does not force anyone to continue doing business with you without getting paid. Basically, you have two options when it comes to utility bills in bankruptcy:
a) leave them alone and keep paying;
b) quit paying them and discharge the debt.
Which option do you choose? Well that depends on whether or not you need that utility provider’s services any more. If you don’t then you can discharge them. But if you do, you’ll have to catch the bill up and keep paying.
Example: Debtor owes Comcast $400 for past cable bills, $800 to Verizon for an old cell phone that has been disconnected since 2009, and $300 to Alabama Power. Since he no longer owns a verizon phone, he doesn’t need them anymore and can discharge that debt. Comcast will have to be paid if he wants to keep Cable, but he can save that $400 by just switching to satellite or Public TV. If Debtor lives in Alabama, Alabama Power has a monopoly on electric service, and he has no choice but to pay their $300 or move out of the state.
So to summarize, you have the right to discharge it all, but you only want to exercise that right if you don’t need those particular utility services any longer.