Many people who are struggling financially to pay their mortgage, vehicle payments, medical bills and/or credit card debt also end up getting very behind in their utility payments. Disconnect notices from the electric, water, gas and telephone companies fill the mailbox and even payment arrangements become impossible to keep.
Filing for bankruptcy protection is usually a last resort for people in financial crisis, but if shutoff of utilities is an imminent threat, filing for Chapter 7 or 13 is an option. As soon as your bankruptcy is filed, utility companies are prohibited from terminating your service. This is referred to as an automatic stay. It’s the same legal protection that stops the bank from foreclosing or any other lawsuit or legal action because of debts you owe.
Once you file for bankruptcy, you have twenty days to show to the utility company that you will pay future bills. This is referred to legally as “adequate assurance.” If you don’t, then the utility company can shut off your service, so it’s important to act quickly. Forms of adequate assurance can be a deposit on your account or a co-signer. If the utility will not accept your adequate assurance, you can request the court issue an order that they accept.
How the debt you owe the utilities will be handled depends on what type of bankruptcy you file. Chapter 7 bankruptcies, the all the debt will be discharged. However, if you had a pre-bankruptcy security deposit with a utility company, the company can legally keep the deposit and apply it towards the amount you owe them. In Chapter 13 bankruptcy, the debt will be included in the repayment plan.
If you are overwhelmed with financial debt and are considering bankruptcy, make sure you consult with an experienced Illinois bankruptcy attorney. The process can be a complicated one and people shouldn’t attempt to navigate through it without qualified representation.