Immediately upon the filing of any bankruptcy case in New Jersey, including a chapter 13 or chapter 7, no creditor may commence or proceed against the debtor regarding any matters relating to payment arrears. Therefore, no utility company is permitted to shut off a person’s service, after the bankruptcy filing. Also, if the service was terminated prior to the filing, the service must be restored, as soon as possible. Typically, the service is restored within one to two days of the bankruptcy filing.

What happens to the pre-filing debt? If the debtors meet all of the criteria for a chapter 7 discharge, the total amount of the debt is eliminated under this chapter. The amount of utility debt that is eliminated in a chapter 13 depends on the debtors’ income, expenses, assets, and liabilities. However, the elimination of utility debt is typical, and may include most of the pre-filing debt.

Any utility debt incurred after a chapter 13 and/or chapter 7 bankruptcy filing, must be paid and is not included in the bankruptcy case. Also, any debt incurred during the chapter 7 and/or chapter 13 case and before the final discharge is not included in the bankruptcy case and must be paid. Also, if any post filing utility debt is not paid in compliance with the ordinary utility company terms, the utility company may attempt to collect the debt and terminate the debtors’ service. Under this scenario, the utility company does not need to request permission from the court to terminate the service and/or collect the debt.

The bankruptcy code requires a debtor to make a security deposit with the utility company within twenty (20) days after the bankruptcy filing. If the deposit is not paid within the twenty day period, the utility company is permitted to terminate the debtors’ service. However, typically, the utility company will permit the debtor additional time to pay the deposit. The utility company establishes another account after the bankruptcy filing. The amount of the security deposit may vary depending on the company. Typically, the amount of the deposit is approximately the amount of the highest bill during the ninety days prior to the filing.

If the utility company is not notified of the bankruptcy filing in a chapter 7 bankruptcy case, the company may allow the debtor to pay the bill as if there was no bankruptcy filing. This may be beneficial if the debt is less than the amount that would be required for a deposit. For example, if the debt is $150.00 and the deposit would be $300.00, it is beneficial to proceed with the pre filing account number.

Consulting a New Jersey Bankruptcy Lawyer

There are a number of New Jersey residents who are falling behind with their utility bills. If you are concerned that your utility services will be terminated, contact the Law Offices of Robert Manchel toll-free, at 1(866) 503-5655, to speak with an experienced bankruptcy attorney in New Jersey.