Bankruptcy Prevents Utility Disconnections

October 13, 2009

For families in financial difficulty, sometimes paying for even the most basic things is a struggle. Fortunately, the bankruptcy code protects debtors from the disconnection of necessary utilities like water, electricity or gas services. Specifically, a utility company may not alter, refuse, or discontinue service to an existing customer solely because either (1) the customer filed for bankruptcy protection; or (2) the customer failed to pay a pre-petition debt to the utility.

However, this protection is limited. Within 20 days after the bankruptcy filing the debtor must give the utility company "adequate assurance of future payment." This assurance is usually in the form of a new security deposit. The law allows the utility company to keep any previous security deposit and apply that deposit to your prior bill. The amount of the new security deposit is negotiated between the parties, but can be decided by the bankruptcy court if no agreement is reached. If the debtor does not provide "adequate assurance of future payment" within the 20 day time period, the utility provider may discontinue services.

A few years ago the Fifth Circuit Court of Appeals decided that a cable television provider is not a utility service for purposes of the bankruptcy code. In issuing its decision, the Court said:

“This section 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.”

By analogy internet and cell phone services would not be considered utilities by the bankruptcy courts.

If your family is overwhelmed by debt and facing a utility disconnection, consider bankruptcy as a way to "keep the lights on" and provide some relief. An experienced bankruptcy attorney can explain how the bankruptcy code can prevent a utility disconnection and stop all creditor collection action.  Call Fears | Nachawati today for a free consultation by dialing toll free 1-866-705-7584 or e-mail us at info@fnlawfirm.com

 

More Blog Posts

CONTACT US

Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with all your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears | Nachawati.

Inquiry Type

  • General
  • Personal Injury
  • Immigration
  • Bankruptcy
  • Drug Litigation
  • Family Law

Locations

With offices in Texas, Florida and Colorado and attorneys licensed in Texas, Florida, Colorado, Arkansas and Oklahoma, Fears | Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consulation

Live Chat (Online Now)