It goes without saying: having utility services has a lot to do with my Indiana bankruptcy clients’ well-being.  It’s important to know, if you’ve fallen behind on utility bills and the electric, gas, or water company is threatening to terminate your service, what to do first. If you don’t owe substantial sums, the utility companies may be willing to work out a catch-up plan.  You would contact each utility company’s customer service office.

There are rules utility companies must follow for shut-offs.  Shut-offs may happen only 8AM-3PM on business days.  If you can provide a written statement from a doctor or public health official that a shut-off would endanger the health and safety of a household member, the shutoff must be delayed ten days.

Now, how does filing bankruptcy relate to utility shut-offs? Remember the automatic stay that goes into effect as soon as you file bankruptcy?  That court order puts an immediate halt to most collection efforts. In the case of utilities, bankruptcy laws require the utility company to restore service they’ve terminated prior to the filing, and then prevents the company for terminating service again. However, you will have to pay a “reasonable deposit”, usually two to three months’ worth of payments to the utility company within 20 days of filing bankruptcy.

Indiana Legal Services, Inc. explains that for gas bills, the required deposit can’t be more than 4 months’ estimated bills (2 months is the limit if the person’s on a “budget plan”).  For water, electricity, and phone, the limit on the deposit is two month’s worth of estimated bills.  But, if any required deposit is greater than $70, you must be allowed to pay it in eight weekly installments.  The good news is that, if you pay the bill on time every month from then on (different utilities have different rules here, ranging from 9-15 months), you’ll get your deposit refunded.  If your deposit is held for more than one year, you’ll get 6% on your money!

So what happens to the unpaid bills that led to the shutoff in the first place?  If you file for Chapter 7 bankruptcy and the court discharges your debts, the back utility bills can be eliminated without any payment. In a Chapter 13 bankruptcy, the court will determine whether the back utility bills will be included in the three-to-five year repayment plan.

The bottom line is that bankruptcy law’s automatic stay can go a long way in making sure the heat, the lights, and even the phone, stay ON!