Many of our Minnesota clients are worried about more than just credit card debt-they also fear having their utilities shut off, especially during the world we live in these days with coronavirus. What happens when you have used up all of your available resources, yet still owe a sizeable amount to Xcel Energy?
Can filing for Chapter 7 bankruptcy protection safeguard you against having your electric service disconnected? The answer is that yes, it can indeed help, but with certain limitations. If you are considering a Chapter 7 bankruptcy, here’s what you need to know.
How it Works
11 U.S.C. §366 of the U.S. Bankruptcy Code states that a utility may not “alter, refuse, or discontinue service to, or discriminate against, the trustee or the debtor.” In other words, filing for Chapter 7 prevents the company from disconnecting or refusing service because of your inability to pay.
That protection only goes so far. To continue service, you will need to provide assurance of payment within 20 days after filing your bankruptcy petition.
That assurance can be in the way of cash, a certificate of deposit, letter of credit, surety bond or any other mutually-agreed upon form. It must generally be in the amount that is greater than or equal to two months’ worth of normal service.
What Happens to Current Energy Bills
Filing a Chapter 7 petition will automatically invoke what is known as the automatic stay. This means that creditors, including utility companies, can no longer attempt to collect any money owed them.
Because of the automatic stay, you will not have to worry about paying off your balance or having your service disconnected. At the same time, it will not protect you against future bills. What it does do is buy you enough time to come up with the assurance of payment so that you can continue receiving service.
In a Chapter 7 bankruptcy, utility bills are generally placed into the category of unsecured, nonpriority debt. As such, they will typically fall very low on the list of bills to be paid once your case is fully settled. More often than not, utility companies are forced to write off past-due bills, although there are always some exceptions to this rule.
Filing for Chapter 7 in Minnesota
If you have past-due utility bills, you may be wondering whether or not you could benefit from Chapter 7 relief. To qualify, you will have to pass what is known as the Means Test. Among other things, you will need to ensure that you are making less than the median household income for Minnesota, and demonstrate that you have certain financial expenses.
Figuring out the Means Test can sometimes be very complicated. Fortunately, the attorneys here at Walker and Walker are very familiar with Chapter 7 bankruptcies, and can easily help you navigate the process.
Reasons to Hire Us
There are several advantages to hiring a law firm such as Walker and Walker to help you with your Chapter 7 bankruptcy petition. One involves ensuring that utility companies and other creditors abide by the law. Accordingly, you will not have to worry as much that Xcel Energy or any other utility provider will disrupt your service when they are not authorized by law to do so.
Having an experienced attorney on your side also means that you will not have to face the United States Bankruptcy Court for the District of Minnesota alone. We know that this is often a very stressful process, but we are here to support you every step of the way.
Don’t wait until Xcel Energy has cut off your service. Contact us today so that we may provide you with a free consultation.