If you have gotten behind on some of your household payments, you may be wondering if bankruptcy can help with old utility bills in Ohio. It’s important to understand what bankruptcy can and cannot do before you move forward, so that you know exactly what to expect during this process.
Are you hoping to discharge utility debt through bankruptcy in Ohio? If so, check out this article, where we will discuss how bankruptcy addresses utility bills in Ohio and how this approach differs between Chapter 7 and Chapter 13 bankruptcy.
Are Utility Bills Dischargeable in Bankruptcy?
The main determining factor between dischargeable and non-dischargeable debt during bankruptcy is whether or not the debt is secured or unsecured. Secured debt is backed by collateral that the creditor can seize, while unsecured debt isn’t.
In most cases, bankruptcy will discharge unsecured debt, especially if you are filing for Chapter 7. And the good news is that the majority of utility debt is unsecured.
If you file for Chapter 7, utility bills are usually dischargeable, allowing you to move forward with a clean slate. But if you file for Chapter 13 with utility debt, some of the debt may be included in your repayment plan, depending on the circumstances. However, utility bills can usually be discharged in Chapter 13 bankruptcy.
How Bankruptcy Stops Collection Activity
When you have past due utility bills in Ohio, this can lead to several types of problems. The most common repercussion of this is having your utility services shut off. However, the utility company can also refer your past due balance to a collection agency who can start collection actions against you.
When you file for bankruptcy, no matter what type of bankruptcy, you get the benefit of an automatic stay. The automatic stay provides immediate protection once you file for bankruptcy, prohibiting creditors from pursuing any collection actions against you.
In the case of utility debt, the automatic stay can even provide temporary protection from shutoffs and collection calls.
Utility Deposits After Filing Bankruptcy
As you can see, Ohio bankruptcy can help you address utility bills so that you can get caught up and continue to use your utility services. However, utility companies do have the right to request a security deposit as a condition of service.
The purpose of a security deposit is to make up for past non-payment or late payment, showing that you will keep up on your payments. And in most cases, you will need to pay the utility deposit to continue receiving your utility services.
If your utility company does request a utility deposit, you should discuss this with your bankruptcy attorney. An attorney will have a better idea of what your legal rights are and can advise you on what to do next.
Chapter 13 Repayment Plans for Utility Debt
If you don’t qualify for Chapter 7, the next best option is to file for Chapter 13 bankruptcy. This allows you to start a repayment plan to address debt over a 3 to 5 year period.
And like Chapter 7, Chapter 13 also discharges the vast majority of utility debt. However, in some situations, depending on the type of debts involved, you may need to pay a portion of what you owe. You are also responsible for maintaining your monthly utility bills throughout the duration of your repayment plan.
If, for some reason, during your repayment plan, you are not able to keep up on your utility payments, you need to address this as quickly as possible. You can request to have your repayment plan modified if your financial situation has changed and you can no longer keep up with your monthly payments.
It’s important that you request a modification as soon as possible since falling behind on necessary payments goes against the terms of your repayment plan.
What Bankruptcy Cannot Do
Although filing for bankruptcy in order to address utility debt comes with many advantages, it won’t fix everything. There are several things that bankruptcy cannot do, requiring you to have a strategy moving forward after you have filed.
Here are some examples of what bankruptcy cannot do for utility debt, depending on the circumstances:
- Take care of ongoing utility service fees after filing for bankruptcy.
- Discharge utility debt if the utility company files a claim for fraud.
How to Navigate Utility Bills After Bankruptcy
Utility bills are one of the many financial obligations you will have after filing for bankruptcy. So, you need to have a plan that ensures you can make your monthly utility payments and not fall back into debt.
Here are some actionable steps you can take to rebuild your life post-bankruptcy and avoid falling behind on important payments:
- Set a budget that outlines all of the required monthly payments.
- Pay all household bills early in the month before making any unnecessary purchases.
- Set your bills to autopay so that you don’t miss the deadlines.
FAQ Section
Can bankruptcy stop my utilities from being disconnected?
Yes, filing for bankruptcy initiates the automatic stay, which can temporarily protect you from having your utilities disconnected.
Will old utility bills be erased in Chapter 7?
Usually, yes. Unless there are certain exceptions to the utility bills, most utility debt is dischargeable, regardless of how old it is.
Can utility companies require a deposit after bankruptcy?
Ohio law allows utility companies to require a deposit for any ongoing utility services, even after you have filed for bankruptcy. And in most cases, you will need to pay this deposit.
Can I include multiple utility accounts in bankruptcy?
This is usually allowed as long as the debt connected to the different utility accounts is categorized as dischargeable.
Hire a Bankruptcy Attorney in Ohio
If you have past due utility bills in Ohio, you should consult with a bankruptcy attorney before beginning your bankruptcy case. Richard P. Arthur, Attorney at Law, has extensive experience handling bankruptcy cases across the state of Ohio and can help you navigate different types of debt. To proceed with your case, contact us today at 937-254-3738 for a free consultation.