When people think of bankruptcy they think of credit card debt. Although utility bills are a debt that can be easily discharged in bankruptcy, many people never take advantage of this type of discharge.
Discharging Utility Debts
Utility bill debts are unsecured debts because they are not secured against an asset as collateral. Since these debts are issued at the promise for repayment, the utility bill creditor holds less collection recourse than other types of creditors. However, there are a few issues to consider when having utility bill debts discharged in bankruptcy.
First, the utility bill does maintain the right to keep your initial deposit when you default on your bill payments. Second, the utility company also maintains the right to suspend your utility services as a result of failing to pay your debts. Not only is having your service suspended problematic for the time you experience without service, but you may also find it difficult to obtain new service from another company when they conduct a credit check and see you have outstanding debts to another utility company.
Therefore, if you are planning to file for bankruptcy and include your utility bill debts, it is best to file for Chapter 13. This way you can repay your debts to the utility company over time while being freed up to resume services with another carrier and have your deposit refunded.