If you are in danger of losing your gas, electric, and/or water services because you have fallen behind on your bills, can you file bankruptcy to stop the utility companies from shutting off your services? This is a good question, and we hear it quite frequently when we consult with clients in Medford, Eugene, Portland, Bend, and the other cities that we serve. Unfortunately, the answer is a less-than-definitive yes and no.
A Chapter 7 bankruptcy is a liquidation bankruptcy, which means that unsecured debts can be wiped away if you qualify and you file successfully. You get an automatic stay when you file for this type of bankruptcy, which freezes creditors in their tracks while the process is underway. They can no longer try to collect on unpaid unsecured debts. Utility bills are unsecured debts and can be eliminated in a chapter 7 or 13.
Utility companies cannot cut off your services immediately after you file, but you only have 15 days to provide them with “adequate assurance” that you will be able to pay your bills going forward. This usually equates to paying them a deposit of twice your average monthly bill. If you fail to comply with this adequate assurance provision, they can indeed suspend your service. Conversely, if you do meet the requirement, shut-offs are prohibited, and this remains intact when your outstanding utility balances are discharged when the bankruptcy is finalized.
We should point out the fact that bankruptcy is not your only option if you want to take action to prevent utility companies from terminating your service due to unpaid bills. In Oregon, if a health care condition is present, a medical certificate can prevent disconnections for a limited period of time. Utility companies also offer deferred payment plans for people who are experiencing financial hardships that can prevent service terminations.
If you are concerned about a loss of utility services and other negative consequences that can come about as a result of mounting financial problems, we are here to help. We have been providing bankruptcy assistance in this area for more than three decades, and we provide each and every one of our clients with personalized attention. Our firm offers free initial case evaluations, and you can set up an appointment right now if you call us toll-free at 1-800-682-9568.