One of the most common questions first time bankruptcy filers ask is, “Can you include past due utility and cable bills in a bankruptcy filing?”
There are basically two types of bankruptcies most individuals can file- a Chapter 7 or a Chapter 13.
By bankruptcy law, you must list all your debts and the creditors you owe for any type of bankruptcy filed, including past due utility and cable bills. All debts will be put in a priority list, and depending on the type of bankruptcy, will be paid according to either the prioritized order or a payment plan.
A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. Here, a bankruptcy court trustee will take your non-exempt assets and liquidate, or sell them, in order to pay off as many creditors he or she can with the liquidated cash.
Any unsecured debts, like past due utility and cable bills, that the liquidation cannot pay in part or full will be discharged. As a result, within a certain time frame after hearing of the bankruptcy, utility companies might raise your deposit in some states.
Your only recourse when a utility company raises a deposit is to make an appeal to the bankruptcy court to make the deposit affordable. The federal courts have the power to make this happen, but it will require you to petition the court, possibly an added expense.
A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their debts over three or five years.
Like a Chapter 7, you will have to list any past due utility and cable bills as debts in a Chapter 13. These debts will be prioritized and confirmed by the bankruptcy court through your payment plan.
Your payment plan will be designed to pay part or all your debt with the qualifying disposable monthly income determined when you filed.
These debts will be handled like all unsecured debts paid in a Chapter 13. If there is enough disposable monthly income to pay off all the unsecured debt in the approved time frame, your debts are satisfied. If There is not enough disposable monthly income to pay all your unsecured debt, the remaining non-exempt debt will be discharged.
In a Chapter 13, just like in a Chapter 7, when a utility company learns about the automatic stay of bankruptcy, the company may want to demand a higher deposit. If not paid within 20 days of filing, the utility company might petition the bankruptcy court to lift the automatic stay and shut off service.
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