Bankruptcy Can Stop Disconnection of Utilities

When a person files Bankruptcy, the federal law stops creditor collection actions and gives the debtor an opportunity to formulate a plan to repay or eliminate his or her debts.  When a person owes a debt to a utility company, that company is prohibited from disconnecting the debtor's service.  However, this protection is limited.

To prolong the protection under the US Bankruptcy Code, the debtor must give the utility company "adequate assurance of future payments" within 20 days of the Bankruptcy filing.  Usually this means a new security deposit.  The law allows the utility company to keep any previous security deposit and apply that deposit to the debtor's debt prior to the Bankruptcy.  The amount of the new security deposit is usually negotiated between the parties, but the Bankruptcy Court can decide a reasonable amount if the parties cannot agree.  The utility company can disconnect service if the debtor fails to give "adequate assurance of future payments" within the 20-day time period.

Bankruptcy only stops the disconnection of necessary services.  The Fifth Circuit Court of Appeals (which decides Bankruptcy cases on appeal from Texas federal courts) found that a Bankruptcy filing does not prevent a cable television provider from disconnecting services.  The Court stated: "This section is intended to cover utilities that have some special position with respect to the debtor, such as an electric company, gas supplier, or telephone company that is a monopoly in the area so that the debtor cannot easily obtain comparable service from another utility."

Television, internet, and cell phone services likely do not qualify for this extended Bankruptcy protection.

If you are behind on your necessary utilities, such as water, gas, or electricity, and are facing disconnection of these services, you need to call the Law Office of Nicholas R. Westbrook at (713) 893-6204.  Mr. Westbrook is an experienced and motivated Houston Bankruptcy lawyer who can help you with mounting utility bills, as well as other Bankruptcy relief.  To learn more about Bankruptcy and other debt relief solutions, please call our office today.  A free legal consultation is available at several Houston locations.  Stop letting debt ruin your life.