Will Bankruptcy Help With Late Utilities in NYC?
Utility bills such as Con Edison electric bills can be discharged in a Chapter 7 bankruptcy since they are considered dischargeable debt (like credit cards). Someone who files for Chapter 7 bankruptcy will be entitled to electric service regardless of the amount owed before the petition was filed. In a Chapter 13 bankruptcy, the overdue electric bill may be paid over 3 or 5 years. If a case is converted from a Chapter 13 to a Chapter 7, then all of the outstanding utility bills are dischargeable as of the moment the case is converted. Once a Chapter 7 bankruptcy case is filed, future amounts incurred for service will not be dischargeable in the current bankruptcy action.
Bankruptcy and Your Utilities
It is important to understand the different consequences of filing for bankruptcy on your utility service. Section 366 of the US Bankruptcy Code says that no utility company may “alter, refuse, or discontinue service or discriminate against” someone who has filed for bankruptcy for 20 days after the bankruptcy filing. Essentially, Con Edison is not allowed to terminate electric service for at least 20 days after a bankruptcy petition has been filed. After the 20 days is up the utility company may request “adequate assurances” from the debtor to continue service. Adequate assurances are something protecting the utility company if the debtor does not pay future electric bills. Sometimes an agreement that the debtor will make all future payments for service on time or the utility service can be terminated without normal procedures would be one example of adequate assurances. Similarly, a deposit for electrical service is often sufficient.
This is assuming that the debtor still has electric service when the petition is filed. There are different scenarios that occur if the debtor does not have service when the petition is filed.
What happens if Con Edison has already turned off my power and I file for bankruptcy?
First, it is important to note that the utility provider is not allowed to ask for money that was owed before the case was filed. Essentially, Con Edison should now treat you as a new customer. They may re-instate your service with no issue. More often, the utility provider will ask for a deposit to resume service. A reasonable reconnection fee is all they are allowed to ask for. It is a violation of the bankruptcy code if the fee can somehow be attributed to the amount owed for pre-filing arrears (amounts owed).
Similarly, if a Chapter 13 bankruptcy is filed and the arrears are being paid off through the Chapter 13 plan, the electric company should restore electricity immediately.
It should be noted that The Bankruptcy Code is a shield not a sword. The idea is to help people who need a fresh start, not to punish creditors. So if Con Edison is unable to restore power because of defective equipment or a natural disaster, the debtor will need to wait for service to be restored just like everyone else. But if the electric company decides to punish the debtor for filing for bankruptcy, sanctions are available against the electric company.
Essentially, what this means to you is that if you file for bankruptcy and you are behind on your electric bill you will not have to pay back what you owed. That amount will be discharged. You will need to pay future bills in a timely fashion. If your power is on when you file, you will effectively be starting off as if you were current with your electric bill. If your power is off you may need to put down a deposit to get your power turned back on.
If you are interested in discussing your options with a skilled bankruptcy attorney please call 212-244-2882 anytime. The Law Office of William Waldner only practices Bankruptcy Law and is always here to help you.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.