Utility Bill Arrears and Bankruptcy
- 28 Oct 2021
Utility bill arrears are unsecured debts. As such they are included if you go bankrupt.
Included in this article:
- Are utility bill arrears included in bankruptcy?
- Will you have to change your utility suppliers?
- Is bankruptcy the best solution for this type of debt?
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Are Utility Bill Arrears written off by Bankruptcy?
Bankruptcy includes all your unsecured debts. As such any arrears you have on your gas, electricity, water and Council Tax accounts are written off by the process.
After you are bankrupt the service providers can no longer demand that you pay the arrears your owe. If you are currently making monthly payments towards them you can stop doing so.
Utility bill arrears from previous properties are also included. If you have a payment plan in place these payments can stop as soon as you are bankrupt.
Utility arrears that remain outstanding from a previous property can also be included in Bankruptcy.
Will you have to change your Utility Suppliers if you go Bankrupt?
There is no need for you to change your utility suppliers once you are bankrupt. For any accounts that are in arrears simply inform them of the situation. They will start new accounts for you from your bankruptcy start date.
You remain responsible for paying your ongoing bill payments. You need to make sure that you include a sufficient amount in your living expenses budget to allow you to do this.
The Official Receiver will review your living expenses. You will be allowed to keep enough of your income to cover all your household needs including ongoing utilities payments. However any money left over may have to be paid towards your debts.
There is no need to inform utility suppliers if your accounts are up to date. Just keep paying them as normal.
Is Bankruptcy the best solution if you have Utility Bill Arrears?
Although utility bills are written off in Bankruptcy this does not necessarily mean that it is the right debt solution for you. It is important to consider how much debt you actually owe.
If you owe less than £1000 the cost of Bankruptcy will probably outweigh its benefits. In these circumstances you may be better off considering a Debt Relief Order (DRO). The result of carrying out this solution is really the same as bankruptcy. However the upfront cost is far less.
If you are struggling with debts but are a home owner you might think that your property will be at risk if you go bankrupt. This is not necessarily the case.
If there is little or no equity in your home there is a high chance you will be able to keep it.
I have been a tenant at current address and utility bill payer for over 2 years. I went bankrupt last sept and all my affairs were in order yet electric company are harassing my landlady for a bill included in my bankruptcy even passing to creditors. I have sent proof of agreement on tenancy, bank statements and all proof yet they harassing landlady even removing my name from the electric accout yet i have paid it 2 years and still do. Help
Hi Mark
Remember, only debts incurred prior to the date you went bankrupt are included in your Bankruptcy. In addition the debt must be in your sole name. If when the debt was incurred, you were simply lodging at the property and the electricity bill was in the landlady’s name (or even in joint names), then she is liable to pay it.
I assume the electricity bill in question was incurred prior to the date you went bankrupt and that the agreement was solely in your name? If both of these things are true, then the debt is included in your bankruptcy. As such, the electricity company must write it off and can’t attempt to recover the balance from the landlady.
In this situation, I suggest you contact the official receiver’s office that was dealing with your bankruptcy case and ask them to write to the electricity company to confirm the position.
On top of this, the landlady should write a firm letter to the electricity company confirming that the debt is not hers and if they continue to contact her, she will escalate a complaint to Ofgem.