An amendment to the Bankruptcy Code in the omnibus spending bill (enacted December 27, 2020) provides bankruptcy debtors with delinquent utility bills a measure of protection from interruption in their service.
The newly created subsection (d) in 11 USC 366 protects individuals during the pendency of the case who make a payment to the utility for service provided in the 20 days of the filing of the bankruptcy case and who make timely payments for post petition service thereafter.
In plain English: individual debtors cannot have their utilities disconnected as long as they make some payment for service provided after filing promptly after the commencement of the case.
The statute merely provides that the debtor make “a payment” without reference to whether that payment is payment in full for the period in question.
This provision expires a year from enactment. So, debtors in reorganization plans are presumably left to the meager protections of Section 366 before the 2020 amendment upon expiration of subsection (d). Unlike other bankruptcy provisions in the Consolidated Appropriations Act of 2021, there is no saving clause that keeps the provision in effect for cases filed when it was part of the law.
Unaddressed is the short duration of this protection for Chapter 7 debtors, whose cases are over and done with in a matter of months. Cases where the trustee administers assets may provide relief while the trustee’s work continues. At the expiration of the statutory protection, presumably debtors will be faced with providing a security deposit to assure continued service under state law.
Utilities present powerful problem, and the government needs to do more.
At this writing in December, 2020, an estimated 205.4 million people in the US are at risk of losing utility service. That’s roughly 58% of the population.
Only a small fraction of those people can be expected to seek bankruptcy relief.
Here in Montana, relief from the threat of disconnection is outlined here:
Also, here: https://psc.mt.gov/Portals/125/Documents/Consumers/energy/pdf/UtilityRules03012001.pdf
Utility Deposit and Shut-off Information
Authored By: Public Service Commission (Montana)
Information about utility company deposits, shut-offs, and more: Link to information: https://psc.mt.gov