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Utility Bills and Bankruptcy

Utility Bills
Detail of Electric meter on side of building

Can Bankruptcy Stop Utilities from Being Shut-Off?

The average household in southern Ohio spends well over $3000 per year on utilities. When you’re in financial distress, these bills can be overwhelming. And utility shut-off is a disaster for most families. If you’re suffering from overwhelming debt, you sometimes face a tough decision, keeping the utilities turned on or paying other important bills.

PIPP and other programs can make matters worse

Many people on the PIPP program have significant past-due utility bills that they will simply be unable to pay. Most people who get behind on their utility bills also are behind on many other bills. When utility shut-off occurs, it throws your entire household into chaos.

Utility companies charge hundreds of dollars to reconnect service after he shut off. And, it is customary to require a significant payment towards the past due amount on the utility bill. It is a good idea to contact the utility company ahead of the shut-off to try to work out some kind of informal payment plan to keep the utilities from being disconnected.

Utility Shut-off Warning?- File your bankruptcy first!

Generally, utility companies will give you several weeks’ warning before actually disconnecting the utility service. When this happens, you have a tough decision to make, and it usually involves not paying some other very important debts just to keep the lights on. If you are in this situation and have other debts that are also more than you can handle, it’s time to explore your options in bankruptcy.

Filing for bankruptcy before the shut-off is scheduled can be a significant part of your plan for debt relief. 

Can I include utility bills in Chapter 7 bankruptcy?

Utility bills are unsecured debts and treated like credit cards, medical bills, and personal loans in Chapter 7 bankruptcy. They are discharged in bankruptcy. If you are able to file your Chapter 7 bankruptcy prior to the utility service being disconnected, the bankruptcy filing will prevent the disconnect. 

This is because the bankruptcy filing creates an immediate bar to any collection actions, including utility service disconnection.

When you file Chapter 7 and include your past-due utilities, all of the utility bills right up to the date of filing are included in Chapter 7 and discharged with no payment. As a bankruptcy attorney, I regularly see my debt relief clients surprised by the utility bills they get after filing bankruptcy. The utility company generally wipes out the bill up to the very day of filing.

In southern Ohio, we generally do not see utility companies ask consumers to provide adequate assurance of future payment. And, happily, utility companies tend to be very responsive to notice a bankruptcy case. 

In fact, we generally contact the utility company ahead of time if we know that we will be filing a bankruptcy very close to the shut-off date. Historically, the utility company has been very understanding and helpful in avoiding service disruption.

Can utility bills be included in Chapter 13

Yes, just like in Chapter 7, utility bills are treated as unsecured debt in a Chapter 13. Since a Chapter 13 payment plan might pay anywhere from 1% to 100% of the unsecured debt, it is possible that the utility company will actually receive some payment towards the past-due service. Whether or not the utility company gets any money from the Chapter 13 is irrelevant to the service disconnect. The filing of a bankruptcy, and Chapter 13 or in Chapter 7, stops the utility company from disconnecting your service.

Getting utilities after bankruptcy

When a person discharges past-due utility bills in bankruptcy and later seeks to establish utility service at a different location, it is possible that the utility company will require the security deposit payment. This right to require a security deposit is not always enforced. I’ve seen numerous situations where my clients have been able to discharge past-due utility bills and establish new service at a different address after their bankruptcy without paying a security deposit.

Adequate Assurance of Utilities

Adequate Assurance of Utilities under the Bankruptcy Code gives debtors protection against post-petition disconnection of services through providing utility providers with an ‘adequate assurance‘ of payment. So, like the automatic stay prevents other creditors from collecting once a bankruptcy case is filed, the utility services cannot be shut off either for a consumer filing bankruptcy.

If you owe back payments on utility services and you file for bankruptcy, the utility company cannot refuse or cut off your service. This is prohibited in a different section of the bankruptcy code than the stay on repayment of debts (11 U.S.C §366). It also prohibits utility companies from refusing service just because they filed for bankruptcy.

Utility company can request adequate assurance of payment but often does not

Although a utility shut-off cannot happen when you file for bankruptcy, it will eventually expire without further action on your part. Within 20 days after filing for bankruptcy, the company can require you to provide assurance that you will pay future bills.

If you don’t pay your utility bills before a bankruptcy filing, the electricity company might cut off service to your home. If you provide notice of intent to pay, and the bankruptcy wipes out back payments, they must continue services.

On the other hand, we have seen many instances where the utility company may, but did not require Adequate assurance or any deposit whatsoever. It’s good to know that it’s a possibility, but it is not commonly seen in the Dayton, Ohio, area. Consumers filing for bankruptcy get a fresh start, free of past due utility bills without posting assurance of payment. 


If you fail to pay utility bills, this can result in shut-off, throwing your household into chaos. Filing bankruptcy can prevent the shut-off or enable you to get service again if shut-off has occurred.

The past due utility bills are unsecured debts, wiped out in Chapter 7 and paid as low priority debt in Chapter 13.

Filing bankruptcy can result in the utility company requiring you to provide adequate assurance within 20 days, but this does not happen in most cases in Southern Ohio.

Filing bankruptcy on utility bills will not prevent you from obtaining future service.

Filing bankruptcy on utility bills can be an important part of your debt relief plan.


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Useful Calculators

Here are two helpful calculators for managing your debt repayments and Chapter 13 commitments.