How Are Utility Bills Treated in Bankruptcy?

If you are behind on utility payments and file for bankruptcy, you can "discharge" or erase the outstanding bills. In Chapter 7 bankruptcy, the entire dischargeable amount will be eliminated at the end of the case.

If you file for Chapter 13, you'll likely pay a portion of the outstanding bills through your repayment plan, and any remaining amount will be discharged when you complete your plan. Here's how it works.

Discharging Past Due Utility Bills in Chapter 7 Bankruptcy

In Chapter 7 bankruptcy, most types of unsecured, nonpriority debt will be discharged through the bankruptcy. Utility bills, such as electric and gas debts, phone bills, and internet services, are lumped into this type of debt along with credit card balances, medical bills, personal loans, and other debts commonly discharged in Chapter 7.

If you fulfill all Chapter 7 requirements and complete the Chapter 7 process, your outstanding utility debt will be eliminated at the end of your case.

Discharging Past Due Utility Bills in Chapter 13 Bankruptcy

Overdue payments on utility bills are also dischargeable in Chapter 13. However, you might need to pay some portion of the bill.

Utility bills are among the debts paid last in a Chapter 13 bankruptcy case. They don't receive anything until higher priority debts, like recently incurred taxes or support obligations, are paid in full. When money is available to pay this debt category, the creditors must share whatever is left, known as your "disposable income."

After completing the Chapter 13 bankruptcy repayment plan, any balance remaining on the utility bills will be discharged.

Paying Utility Bills During and After Bankruptcy

Filing for bankruptcy does nothing to discharge payments on utilities used after the day you file for bankruptcy. If you fail to pay your utility bills after filing, they will eventually be shut off. In other words, you must continue making regular utility payments after filing for bankruptcy.

Specifically, you'll remain responsible for paying any utility bills you incur after filing for Chapter 7, including those that accrue while your case is open. Also, you must keep up with your current utility bills during the three- to five-year Chapter 13 bankruptcy repayment plan.

Utility Deposits and Fraud in Bankruptcy

Your utility provider can't refuse necessary services because of a bankruptcy filing. However, you can be charged a deposit as a condition of service. Your bankruptcy lawyer can explain more.

Also, in rare cases, a utility company will claim that the customer wrongfully stole utility services. If the utility company proves someone committed fraud to the satisfaction of the bankruptcy judge, the debt won't be included in the bankruptcy discharge. Learn more about debts that aren't discharged in bankruptcy.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help. Below are links to bankruptcy forms and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.