Filing Bankruptcy On Your Chicago Utilities

Chicago Utilities

You can file bankruptcy on your past-due utility bills. You may owe money to Comed and are close to a shut off. You may owe money to Nicor gas and are close to a shut off. You may owe money to AT&T and are already shut off. No matter what your situation, if you are filing bankruptcy, your utilities can be affected. The best way to think of the situation is this: whatever you owe on your utilities prior to filing your bankruptcy case is eliminated upon the filing of your bankruptcy case. So if you owe $1100 to Comed and you subsequently file for bankruptcy relief, the amount that you owed prior to the date of filing is eliminated in a chapter 7 bankruptcy or subject to a proof of claim in a chapter 13 bankruptcy.

 Shut Off Issues

Many clients wonder if the utility company will shut them off after they receive notice of the bankruptcy filing. The typical scenario works like this: if you currently have utility service and then file for bankruptcy, the utility company is not likely to terminate your services. They do have the ability under Section 366 of the United States Bankruptcy Code to ask for a reasonable security deposit to assure future payments. This is often 1 to 1.5 times what a normal monthly service charge is. What’s interesting to note, is that the utility service can demand that a security deposit be provided in a lump sum payment. Just recently I had a client who filed for chapter 7 bankruptcy relief and listed Comed as a creditor. Although the service was not turned off, the creditor did ask for a security deposit of $300. The client was having a hard time coming up with the full security deposit at once. My office got involved and attempted to work a payment plan for the client with regard to the security deposit. Unfortunately, Comed insisted that the security deposit be paid in full in one lump sum.

 Assurance Of Payment

In the past I have had altercations in court with attorneys for Comed with regard to the amount of the security deposit. What Comed thinks is reasonable to constitute adequate assurance of payment is often higher than the debtor can afford to put down. For this reason, we have had to petition the court for a more reasonable security deposit figure. It all boils down to the interpretation under Section 366 entitled utility service. The code basically talks about “assurance of payment” as either a cash deposit, a letter of credit, a certificate of deposit, a surety bond, a prepayment of utility consumption, or another form of security that is mutually agreed-upon between the utility company and the debtor. The issue comes down to what is reasonable. If the utility company is not being reasonable in your opinion, you have the right to seek redress before the bankruptcy judge.

Unfortunately, many bankruptcy clients make the mistake of paying their utilities just before filing their bankruptcy case. These clients are simply unaware of the fact that those debts are the types of debts that can be discharged in bankruptcy. Depending upon the type and amount of the debt, a small security deposit will seem like just a minor inconvenience in exchange for eliminating often thousands upon thousands of utility service debt.

For more information regarding bankruptcy and your Chicago utility services, make sure you speak with an attorney prior to paying and of course, prior to filing. You may just learn that the money you are going to put towards your utility service can be put toward your court costs and attorney’s fees. My office is available six days a week with locations throughout Chicago and its suburbs. If you are struggling financially, you are not alone. You may contact the office at 847-520-8100 for immediate assistance.

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