Past Due Utility Bills and Bankruptcy

Section 366 of the Bankruptcy Code prohibits a utility provider from altering, refusing or discontinuing service based on a customer’s bankruptcy filing or unpaid bill. However, the utility service may discontinue service if the debtor does not furnish adequate assurance of payment, in the form of a deposit or other security, for service within 20 days of the filing of the case. Of the utility companies in the Raleigh area, it has generally been the case that Duke Energy requires a deposit approximating 2 months worth of service. A utility provider may recover, and set off against, a preexisting security deposit on hand at the time of the bankruptcy filing on account of a past due bill. Because of the potential deposit requirement, it is generally not helpful to owe a past due utility bill where there is a need for future service, but there is some protection afforded in bankruptcy.