Continuation of electrical, gas, water, and other basic household utility services through and after a bankruptcy may be a great concern to some consumers wishing to file bankruptcy, particularly those who are not, as a side-effect or direct result of the bankruptcy, changing their residence. While overdue utility bills are not an uncommon feature of many bankruptcy filings, they are frequently not the primary focus of the bankruptcy. Rather, many people are pressured into considering bankruptcy due to other forms of debt, such as medical bills and credit cards. In those cases, the person considering bankruptcy may not even be behind in their utility payments at all.
Nevertheless, there is a possibility that the filing of a bankruptcy petition will disrupt a consumer’s utility services if they are behind in their payments at the time that the bankruptcy petition is file. Under the Bankruptcy Code, a utility may not refuse or discontinue service because a customer has filed bankruptcy—unless the customer filing bankruptcy provides “adequate assurance” that they will be able to pay for their utility service in the future within 20 days of filing the bankruptcy petition. While, most of the time, if the customer is fully current in their payments to the utility, the mere filing of the bankruptcy petition will not cause the providing utility to disrupt their service or demand this “adequate assurance,” the question of what “adequate assurance” actually is and how much of that assurance must be provided to be “adequate” remains for consumers who are not current in their payments.
Depending on the local practice of utilities in your area, “adequate assurance” can mean a cash deposit, a letter of credit, a certificate of deposit, a surety bond, a prepayment for future utility consumption, or some other type of security. Generally, what is required is some sort of deposit, though the amount of the deposit, where that is considered acceptable, is often still a point of dispute.
If you are considering filing for bankruptcy and have any questions regarding the continuation of your utility or other services before, during, and after the bankruptcy proceeding, please contact me to schedule a free, initial interview, and we will work together to find the best solution for your personal circumstances.
