Although most people never think of utility bills being part of a bankruptcy case, they are actually quite common among filers. Of course they are not the main source of debt, but getting behind on utility bills is quite easy when you are experiencing financial hardships. The good news is that these debts are easy to resolve in bankruptcy, but do come with some small considerations.
Utility bills are unsecured debts, meaning they do not hold any asset as collateral on the loan. This generally means the debts can be resolved without costing you much out of pocket or putting assets at risk. However, utility bills are handled a bit differently than other unsecured debts.
Utility companies are afforded an “adequate assurance of payment” under Section 366 of the U.S. Bankruptcy Code. This usually comes in the form of the security deposit that is placed at the time the service is initiated. The utility company has the right to terminate service or deny the refund of a security deposit if you default on the payment. However, once you have filed for bankruptcy you can get the service reinstated by providing the company proof of your case, paying an additional security deposit or repaying the debt through Chapter 13.