Utility Bill Debt and Your Bankruptcy Options - Total Bankruptcy
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Utility Bill Debt and Your Bankruptcy Options

Utility bills are typical household expenses that can add strain to a family's finances, especially when seasonal swings in temperature cause a huge spike in heating or electrical costs.

Because these bills aren't backed up by any property, they are considered unsecured. If you fall behind on electrical, gas, or water utilities, the company may send the debt to a collection agency, and may even threaten to turn off your services.

If you're facing harsh tactics by a utility company after falling behind on payments, bankruptcy may help you prevent shut-offs and halt debt collection lawsuits. To find out if bankruptcy is right for you, receive a free consultation with a local attorney by filling out the form below.

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Utility Bill Harassment and the Bankruptcy Automatic Stay

When you file bankruptcy the automatic stay should kick in and can provide quick protection against any type of collection effort. This includes:

  • Phone calls
  • Letters
  • Lawsuits
  • Wage garnishment
  • Foreclosure
  • Repossession

The automatic staykicks in regardless of which type of bankruptcy you file. Because utility bills are considered unsecured debt they may be included in either a Chapter 7 or a bankruptcy under the Code's Chapter 13.

These are the two most common types of personal bankruptcy. Which one may be best for you will depend on several factors, including other types of debt involved and your personal financial goals.

Utility bills in Chapter 7

Chapter 7 bankruptcy is designed to address unsecured debt. In this case, your utility bills could be combined with other unsecured debts like credit card and medical bills. Chapter 7 works quickly to eliminate these debts, but first you must qualify by passing the means test. This is a measure of financial need based on your income and your debt.

If you are eligible to file Chapter 7, you will probably want to discuss your state bankruptcy exemptions with your bankruptcy lawyer to ensure your property is fully protected. Chapter 7 may be a good option for people with lots of unsecured debt and a low income.

Utility bills in Chapter 13

In a Chapter 13, your utility bill debt would be included with your other debts – including car loans and home mortgages. Your debt will be ordered and secured and may be reduced. Then, during a court-ordered repayment plan, you’ll make one monthly payment to satisfy your creditors. At the end of your repayment period, typically 3-5 years, all of your debts should be resolved.

Throughout your repayment timetable you should be protected by the bankruptcy automatic stay. As long as you make your payments you should be protected against harassment, lawsuits, wage garnishments, foreclosure and repossession.

This can be a good option for people who have steady income, and also want to protect lots of property, like a house and multiple cars.

Get answers about your bills and bankruptcy with a local lawyer

Bankruptcy can be a life-changing experience, but it can also be a complex process. That’s why many people turn to a lawyer for help.

A bankruptcy lawyer can look at your utility bills and other debts and help you decided on a type of bankruptcy that’s best for you.

To speak with a local bankruptcy lawyer, complete the free form on this page and we’ll connect you with a local bankruptcy attorney right away.

Free Case Evaluation

Tap to Call - (877) 250-8242

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