Does Filing Bankruptcy Cut off your Power and water? – Alabama Consumer Credit Attorney Judson E Crump

No.  The filing of a bankruptcy does not allow utilities to cut off their services.  Nor does it allow you to keep using those utilities without paying for them.  In most situations, the filing of a bankruptcy has no effect on your utility bills.  You keep using the services, you keep paying the bills, and everyone is happy.

However, there are a few situations where a bankruptcy does impact your utilities.  The first is where you have old bills for services you don’t use anymore.  Most commonly, this involves cell phone bills that you still owe after switching to another carrier.  These are unsecured debts that are typically discharged in bankruptcy.

If you are behind on power and water bills, you can discharge them in the bankruptcy, but if you ever want to use the services of that particular utility again, you’ll have to pay them back what you owe.  In Alabama, for instance, most places are subject to the monopoly of Alabama Power Co., and unless you’re moving to a different state or a local power co-op, then you’re stuck paying Alabama Power off.  The same goes for water bills, but they’re usually easier to escape because they’re more local.

What about situations where you owe Alabama Power for both electric service and a washer/dryer you financed through Alabama Power and they bill you for each month with your power bill?  The bill for the washer/dryer is a separate debt, and should be treated as such.  This means that you can either surrender the washer/dryer and discharge the debt, or you can keep the washer/dryer and keep paying the debt.

Here’s a common example: Debtor owes Comcast $400 for past cable bills, $800 to Verizon for a phone that has been disconnected since 2011, and $600 to Alabama Power for past due bills.

The Verizon bill will be discharged, because the debtor no longer uses that service and has no reason to keep paying it.

Comcast must be paid to keep getting cable, but Debtor can switch to satellite or public TV and save that $400.

Alabama Power must be paid because Debtor still lives in an area where they’re the only provider of electricity.

To sum up: you have the right to discharge all of it, but you only want to exercise that right if you don’t need their services anymore.