File Bankruptcy To Stop Utility Shutoff


It is not surprising these days with the ever increasing cost of food, gasoline, utilities, and especially rising heating prices, more and more people are falling behind on their utility payments. It was reported recently in the media that electric and natural gas shutoffs were up by about 15% over last year in many states. While the energy prices continue to skyrocket, many people’s household incomes have continued to decrease meaning the number of shutoffs will only get worse. The federal government has been searching for ways to help individuals caught in the mortgage foreclosure crisis (or maybe they are really helping the mortgage industry?), but what about the growing numbers of utility shutoffs? Depending on what area an individual lives in, heat and/or air conditioning is a must due to extremes in the weather. So what kind of help is available to these people who are struggling financially?

If a person is facing a utility shutoff and they file bankruptcy, the automatic stay is then imposed by the bankruptcy court which will prevent the immediate shutoff of their service from the utility company. The automatic stay is a court order that protects the debtor from all contact and collection attempts from a creditor. The amount owed to the utility company prior to the filing date can be discharged in the bankruptcy filing. However, any charges after the filing date are the responsibility of the debtor to pay. In addition, the utility company can require the debtor to pay a deposit in order to continue service. The deposit is not applied to any past due balance, but it is used as credit instead. Many times they will give the individual twenty days to come up with the requested deposit. If the individual then does not come up with the deposit in the allowed timeframe then they will shut off the service. The individual has the right to get the deposit back when they no longer use the service, such as if they move, or if they can show that they are able to remain current on their payments after a period of time has elapsed.

Filing bankruptcy will stop impending utility shutoff, but it may only be temporary. It is always best to immediately seek the advice of a bankruptcy attorney if an individual is facing this situation so they can discuss their options and how best to proceed.

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