Utility Shutoffs – Can Bankruptcy Stop Your Shutoff?

by Peter Orville, Binghamton Bankruptcy Lawyer

June 25, 2008

It should be no surprise to anyone that in the midst of skyrocketing food, gasoline, and heating costs, more and more people are falling behind on their utility payments. Yesterday, the Gannett News Service reported that electric and natural gas shutoffs are up at least 15 percent in many states compared to last year.

In fact, in Pennsylvania, PPL Electric Utilities disconnected 7,054 customers through April. That is an incredible 168 percent increase over the same period in 2007. Duke Energy is averaging about 11,000 shutoffs per month in North Carolina. The trend is especially on the increase in suburban areas.

With the continuation of energy price increases far outstripping increases in household income, the number of shutoffs will only get worse. The federal government has been debating methods to help people facing mortgage foreclosures (or are they really only trying to help the mortgage industry?)…but who is trying to limit the number of utility shutoffs?

If you are facing a utility shutoff, and you file bankruptcy, the Automatic Stay imposed by the bankruptcy court will prevent the utility company from shutting off your service. The amount you owe the utility prior to your filing date will be discharged in the bankruptcy.

Of course you will be responsible for paying all of the utility charges that are incurred after the filing date. In addition, the utility company can require you to pay a deposit in order to continue service. Often they will allow you 20 days to come up with the deposit. If you do not pay the deposit in the allowed time, they will then shut off your service.

The deposit you pay them is not applied to your past due balance, but is instead used as a credit. You have the right to get back the deposit when you no longer use their services, or after an appropriate time of showing them that you can remain current on your payments.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.

Last modified: June 27, 2008