Utility Bills in Bankruptcy
Utilities companies such as electric or gas companies have their own rules that have to be followed when a client file for bankruptcy in Maryland. Debtors are stressed out because they have are not current with all their bills including their electric and gas bills. Utilities companies rarely shut off service immediately when utility bills have accrued to a large amount due to non-payment from the debtor for extended period of time. This is a fact in the winter months when a shut off of service can threaten the life of the children and elderly. There are debtors who lost their jobs with a notice turning off their utilities with a bill from $3,000 to $5,000 outstanding balance after a frigid winter or a winter with several polar vortexes in Maryland.
There are special rules for utilities when filing for Bankruptcy protection under all chapters. Once the debtor has filed for bankruptcy protection, the utilities companies are required to keep the gas and power working. This is true as well even if the utility companies sent out termination notice and electric service off and are about to turn off the gas. When the Bankruptcy filed under Chapter 7, Chapter 11, Chapter 12, or Chapter 13, they have notice of the filing, so they have to maintain the other utilities and power companies need to maintain service. A new billing cycle with the post-bankruptcy filing period is started and opened and the bill is then generated for the time period before bankruptcy was filed.
While in the pre-bankruptcy phase the bill is part of the bankruptcy which is either discharged in Chapter 7 or treated differently in other bankruptcy plan. The high amount of the utility bill the client is still responsible on payment on their utility. The utilities are treated differently. The company who deals with utility has a right to security deposit which is reasonable amount to make certain payments are made timely after the bankruptcy discharge. This must be done, and the client has to pay within 20 days of the bankruptcy filing or service will be terminated by the utility company. Many utility companies will have a set amount that they require as a deposit. It varies with the utility companies, but some have a deposit of one and a half to two months of the average utility bill. A few will use a percentage of the yearly bill. Whatever the amount would be, it would be less than the original bill when the service is about to be terminated. This is your money. If you make timely payments in the future, eventually you will be reimbursed with this money.
If the utility company requests an unreasonable amount as a deposit, you can ask a Maryland Bankruptcy lawyer who can help you request the bankruptcy court for assistance in setting a reasonable deposit. There are occasion where the utility company may request a high deposit because some clients performed some illegal activities such as stealing water or electricity from their neighbor. In alternative, the debtor broke the meter, so the utilities companies could not monitor the amount of utilities used and does not bill appropriately. These types of conduct can give the debtor a difficult time setting a reasonable amount as a deposit.
The utility company is required to activate the electricity when they are on notice of the filing of bankruptcy even when the service is already terminated and the client has no power. The utility company has a right to a reasonable security deposit to ensure that you will pay them timely. This will not occur immediately in most cases. The faster the debtor files for bankruptcy, the faster the debtor will have the gas and electric power restored. It is best to contact a Bankruptcy Attorney at the Soubra Law Firm we are ready to assist you in your Bankruptcy needs. Our phone number is (301)219-5038.