Seymour's Blog

How to Legally Wipe Out Utility Bills

It may be hard to believe, but  utility bills can be wiped out in bankruptcy, including utilities such as gas, electric, and telephone. Many people are concerned that if they put their utility bills in bankruptcy the utility will shut off service. Don’t worry about that because it is totally illegal for a public utility to shut off service when a person files for bankruptcy.

It gets even better. If you have had your service shut off because you have been unable to pay your bill, once you file for bankruptcy the utility is required to turn your service back on. The utility is not allowed to turn off service for someone who is in bankruptcy, as long as that person is making payments on his/her utility bill for service and usage that has taken place after the bankruptcy filing. This means that you do not have to pay any utility bill that was incurred before you filed for bankruptcy. You are only responsible to make payments for the utility bills that you incur after your filing date.

Sometimes it takes the utility company a while to reset their computers and to bill you correctly. For example you might use $200 worth of electric and $200 worth of phone service during the month of June, and on July 1 you might get a bill for $400 for the electric and $500 for the phone bill. If you get a bill like this, it is a mistake. It simply means that the utilities have not yet updated their computers to reflect your bankruptcy filing. In this example you are only responsible for the $200 phone bill and the $200 electric bill that you incurred after your bankruptcy filing date.

It is also important that you know that the utility company may require a security deposit for future usage. This is not a bad thing, because it is really like putting money in the bank. When you make a deposit to the utility, they have to keep your money in a special account and it normally earns interest. The deposit must be a reasonable amount, based on your normal monthly usage.

If for some reason the utility requires a deposit which is beyond your financial ability to pay, please let us know, because we have the right to negotiate with the utility service to lower the deposit to something reasonable that you can easily afford.

The bankruptcy law gives you the right to wipe out your pre bankruptcy utility bills. We therefore recommend in most cases that our clients include their utility bills as part of their bankruptcy. If your utility bill is up to date and rather small you might just want to pay it off and not put it in your bankruptcy.

Cable TV: You are entitled to wipe out a pre-bankruptcy bill for cable TV by filing for bankruptcy. Since the cable TV company is not a utility, they might charge you a fee to turn on your cable service if it had been turned off before bankruptcy.

The amount of money you owe the utility company does not matter. We have had clients who owe more than $5,000 on their electric bills, and their service has been shut off for a long period of time. The law is the same for everyone. Once you file your bankruptcy, the utility company has to turn on your service, and your bill will be wiped out when you successfully complete your bankruptcy case.