If you are behind on your utility bills, several things can happen depending on what time of year it is. In the winter, you at least have some protection from shut off, known as the Cold Weather Rule. Your options also may vary depending on whom the service provider is. If it is a municipal utility service (city/county/cooperative), you may be able to enter into a payment arrangement that is based upon your individual circumstances. But what if you do not have this option? Contacting Kain & Scott to discuss how bankruptcy can help is a great way to alleviate some of this stress.
First of all, filing bankruptcy prevents utility companies from collecting on the past-due amounts. It also ensures that your services are not shut off due to these past-due amounts for a period of 20 days (called a “Stay”). Now, while your utilities cannot be shut off right away due to the non-payment of the past due amounts if you file bankruptcy, you must still pay the current amounts that become due during your bankruptcy to avoid future disruption of services. The bankruptcy essentially hits the reset button and allows you to catch your breath and catch up instead of being in that cycle of constantly being behind. Please take note that your utility companies may require what is called adequate assurance payments (basically this is either a security deposit or pre-payment) to continue service.
If your utilities were shut off before you filed bankruptcy, you still have options. Just give Kain & Scott a call. What happens is that your past due amount can still be included in a bankruptcy. Your utility service may require adequate assurance of payments, as noted above. If the amount that is requested is not something that you can afford, it is important to make sure your attorney knows so that he or she can assist.
There are two bankruptcy options, Chapter 7 and Chapter 13, and either can provide assistance with unpaid utilities.
In a Chapter 7, a bankruptcy petition and schedules are filled out and filed. You must take a credit counseling course before you file and another one after you file. After your bankruptcy is filed, you will have a 341 meeting (commonly called a meeting of the creditors). At this meeting, the bankruptcy trustee will verify the information contained within your bankruptcy filings. Creditors rarely show up to these meetings. Approximately two months after the 341 meeting, you receive notice from the bankruptcy court that your debt has been discharged. That completes the process, assuming there are no snags or quirky things that happen in your case. No two cases are the same, so keep in mind that this explanation is simply an illustration of how a case should flow, not a guarantee that this is how it will.
The process for a Chapter 13 bankruptcy is fairly similar to the process for a Chapter 7. You have to take the two credit counseling courses. After you file, you have the 341 meeting. So, what is different? In a Chapter 13, instead of the debt being discharged after the 341 meeting, we create a payment plan and you make payments to the bankruptcy trustee, who then disburses those payments to your creditors. You make these payments for a period of 3 to 5 years. Any remaining debt that is dischargeable at the end of your payment plan is discharged.
How do you decide between a Chapter 7 and a Chapter 13? The first factor is income. If you fall below what is called the “median income,” you automatically qualify for a Chapter 7 (though there are some circumstances that may necessitate a Chapter 13, which I will discuss momentarily). If your income is above the median income, that does not necessarily bar you from a Chapter 7, it simply means that you need to go through an additional step, called the means test. Now, if you do not end up qualifying for a Chapter 7, you can still do a Chapter 13, but if you are over the median income, your payment plan must be a 5-year plan. If you are under the median income and choose to do a Chapter 13, your payment plan can be for a few as 3 years or up to 5 years (and anywhere in between).
Either a Chapter 7 or a Chapter 13 can alleviate the problem of unpaid utility bills.
A few common reasons for folks to elect to do a Chapter 13 when they would otherwise qualify (income-wise) for a Chapter 13 would be if they are behind on mortgage payments, car payments, or rent. A Chapter 13 can help cure these arrearages and prevent or stop foreclosures, evictions, and repossessions.
Even if you qualify based on your income, you may be not able to do a Chapter 7 if you have filed for a Chapter 7 within the last 8 years. In that case, a Chapter 13 may be the best option for your current situation.
It’s simple! Call Kain & Scott at 800-551-3292 and set up a free consultation with one of our attorneys. You can even visit our website at www.kainscott.com and speak to a representative online to set up your free consultation. You have enough to worry about, don’t let utility shut offs be one of them. We can help get things turned around (and turned back on!). Give us a call today!