So what is the deal with past due utility bills?
With the cold winters and hot summers we have here in northern Illinois, topped with some fairly high utility rates, it is no wonder that our utility bills are high. It is easy to fall behind, and while we can try to lower our consumption, living without gas and heat in this climate is not a feasible option. It is quite common for my clients to owe past due gas and electric bills. So what, if anything, can be done about them in a bankruptcy?
There is good news, as a general rule, utility bills can be eliminated in a bankruptcy. There are, of course, exceptions such as when fraud is involved, for example tampering with the meters. Typical bills can be eliminated; however, that is not the end of the story. Let’s dig a little deeper into the effects of eliminating utility bills in a bankruptcy.
First, let’s separate “utilities” into a couple of groups based upon what happens when you try to get future, or continue your current services. Gas, electric and water are in one group and the others such as cable, internet and phone are in another. The first group contains utilities that are necessary for survival. The past due bills can be eliminated, whether from a past location or current location. The problem arises when you want new or continued service. Under a special code section, these utility providers are allowed to place conditions on future service; however, once met you are entitled to service. Generally, the conditions take the form of a security deposit. The good news is that the security deposit is your money and is subject to being returned to you in the future. The bad news is that you will have to come up with the money for the security deposit which can be a financial burden.
As for the second group, (cable, internet, cell phone) there is no requirement that providers are obligated to provide future service as these services are deemed to be non essential. Often the providers will provide future service with a security deposit, but there is no guarantee. As for cell phones, generally a carrier that was not part of your bankruptcy will offer you service, so switching carriers is often the best option. If you switch carriers, you may not be able to keep your current phone number.
So, the bottom line is most utility bills can be eliminated, but you will be forced to come up with a security deposit. Depending on the balance of the past due bill and the current situation regarding services, it may be cheaper to pay the bill, or it may be better to list it. This is something that should be reviewed and discussed with your attorney as each client is different.