WILL BANKRUPTCY HELP ME IF I AM BEHIND WITH MY GAS AND ELECTRIC BILL

UTILITY BILLS IN BANKRUPTCY

Utilities like the gas or the electric company have special rules that need to be followed when you file bankruptcy in Maryland. Clients in distress often have fallen behind with all the bills even the gas and electric bills. The utility bills often have accumulated to a very significant number because the utilities rarely actually turn off service right away. This is especially true in the winter months when a turn off could be life threatening to the elderly or children. It’s not uncommon to have a client that lost a job come in with a turn off notice with a $3,000 to $5,000 balance after a hard winter.

UTILITY PROTECTION AFTER FILING BANKRUPTCY

Utilities are given special protection under all chapters of the bankruptcy code. Once a bankruptcy is filed they are required to keep the power and the gas on even if they have sent out a termination notice and are about to shut the gas and electric service off. The way the system works once a Chapter 7, Chapter 12, Chapter 13 or Chapter 11 is filed and they have notice of the filing the power company or other utility needs to maintain service. The bill is then generated for the time period before the bankruptcy was filed and a new billing cycle with the post-bankruptcy filing period is opened and started.

The bill for the pre-bankruptcy period is then included in the bankruptcy and either discharged in the Chapter 7 or dealt with in the plan under the other bankruptcy Chapters. While the very large utility bill is in the bankruptcy is in the bankruptcy the Client is not without some significant obligations. First the utility company is entitled to a reasonable security deposit to insure performance with regard to the post bankruptcy filing bill. This needs to be arranged for and paid by the client within 20 days of the bankruptcy filing or the utility company can terminate service. Most utilities will have a standard amount they require for a deposit. Depending on the utility company usually the deposit will be one and a half to two months of the average bill. Some will use a percentage of the yearly bill. Regardless, the amount of the deposit is going to be much less than the original turn off. This deposit is the client’s money, so at some point in the future if the client continues to perform the funds will be reimbursed.

BANKRUPTCY LAWYER CAN HELP WITH TURN OFF NOTICE

If the deposit request is unreasonably high an experienced Maryland Bankruptcy lawyer can help you ask the bankruptcy court for help in a hearing to set a proper deposit. Some of the reasons the utility company might give a very high deposit can be caused by creative and illegal ways a client might have coped with a turn off. In the past I have seen client that broke seals on the meters and turned power back on, connected to another power source and took electric power from neighbors. These acts will cause the utility to give a client a hard time about the security deposit requirements.

Even if the turn off has already happened and the client is in the dark, the utility company is required to turn the power back on once they have notice of the bankruptcy filing. They of course are entitled to the security deposit. It will not happen overnight in many cases especially if the turn off is at the street and not remote. Under those circumstances the sooner the client files the bankruptcy case the sooner he or she will have gas and electric power.