Can Bankruptcy Eliminate Past Due Utility Bills Or Service Shut Offs?

Generally speaking, yes, bankruptcy can eliminate most past due utility bills and service shut offs, but there are some exceptions and variables that must be considered.

First, it must be determined if the utility in question has a statutory lien against the property. In many municipalities, the local water utility will have a statutory lien against the property and while bankruptcy can discharge your liability on the past due amount, the lien will remain against the property. In the event of a service shut off, the utility will not be required to reinstate the service until the past due amount is either paid or accounted for in a Chapter 13 repayment plan.

Second, it must be determined if the provider is actually a utility. Gas, electric, and water are obvious utilities. Cell phone service, internet service and cable TV are generally not utilities. Past due balances on all of these can be discharged in bankruptcy, however non-utilities are not required to reinstate service if it has been shut off.

Third, if it is determined that the debt is a true utility and is not a statutory lien against the property, then the past due debt will be subject to the bankruptcy discharge. Service must be reinstated upon demand, but the Bankruptcy Code has provided a special provision for utilities in this situation. They are required to be provided with a reasonable deposit against future service provided before they are required to reinstate service. What is reasonable varies between jurisdictions, but it is common that they will ask for a deposit that equals two to three months of normal service bills. They cannot apply this deposit against past due amounts but can hold it in the event of a future missed payment.

Need Help With Bankruptcy?

Take the first step toward financial freedom. Answer a few questions to get started with your free evaluation.

Why are you considering bankruptcy? *

Company

How much unsecured debt do you have?^ⓘ *

Is an attorney helping you? *

Please describe your current financial situation. *

Contact Information *

Please share your contact information below so we can match you with a local bankruptcy firm. A representative from that firm will call you to explain your options.

There is no charge to speak with an attorney, and your conversation will be kept completely confidential.

First Name Last Name Email Phone Number Zip Code By submitting this form, I expressly consent to receive calls and text/SMS messages from Bankruptcy.com and/or its participating sponsors using automated technology, prerecorded and artificial voice messages. My consent to such contact is not a condition of purchase. I agree to the use of electronic signatures, Privacy Policy, and Terms of Service, including its requirement to arbitrate disputes.