Middletown NY Bankruptcy Lawyer Michael O’Leary, Esq. devotes his entire practice to consumer bankruptcy law, handling cases under Chapter 7 and Chapter 13 for individual persons, married couples and small businesses. Past due utility bills are a common problem for many bankruptcy clients.
When a bankruptcy is filed under any Chapter an automatic stay immediately goes into effect, which halts virtually all collection efforts by creditors. Utility companies are prohibited from shutting off your utilities for past due payments, and if your service has already been disconnected the utility is required, upon request of the debtor, to turn them back on for at least 20 days. However, to keep the utilities on past the 20-day period you must provide the utility, within said 20-day period, “adequate assurance” that you will be able to pay your future utility bills.
In the Middletown, NY area the adequate assurance requirement is generally deemed satisfied when a security deposit is provided to the utility in an amount equal to two months of your average utility bill. If adequate assurance is not timely provided within the 20-day statutory period you are at the mercy of the utility provider, who then will be authorized to turn off your service, unless a different arrangement has been made.
Although the Bankruptcy Code does not define “utility”, the legislative history states it “is intended to cover utilities that have some special position with respect to the debtor, such as an electric company, gas supplier or telephone company that is a monopoly in the area so that the debtor cannot easily obtain comparable service from another utility”. There seems to be a focus upon whether the service at issue is a necessity for a minimum standard of living. Case law suggests that a cable provider is not deemed a utility provider required to accept adequate assurance of payment.
Utility bills for services provided prior to a bankruptcy filing are dischargeable in both Chapter 7 and Chapter 13. In Chapter 13 such debts are considered unsecured and are paid pro rata with all other unsecured debts. Any amounts remaining unpaid at the conclusion of the Chapter 13 Plan are deemed discharged in the Chapter 13.
It must be remembered that utility bills for services provided after the filing of the bankruptcy petition will not be discharged in your bankruptcy. Even if the debtor provided an adequate assurance payment to the utility within the 20-day post-filing period, a post-petition default permits the utility to terminate service without seeking relief from the automatic stay, although the utility must follow applicable laws and regulations that establish procedures for utility service.
Contact Hayward, Parker & O’Leary at 845-343-6227 and allow Michael O’Leary to put his 30+ years of concentrated bankruptcy experience to work for you!