Stockton Bankruptcy Lawyers California

Section 366 of the Bankruptcy code prohibits a utility company from discriminating against a debtor solely because they file for bankruptcy. This also applies in situations where the debtor has pre-bankruptcy debt to the utility company. Once the bankruptcy petition is filed, the debtor has a 20 day window that keeps the utility company from refusing service. After the 20 days have expired the utility company may refuse service if the debtor doesn't pay an adequate deposit for future services.

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Often times the utility companies shut off service for nonpayment. Once a debtor files a bankruptcy petition, is the utility company in most cases is required to reinstate the service. The debtor may be required to pay a deposit for future services. In the case of In re Whittaker, 882 F.2d 791, a utility company had terminated services prior to the debtor's filing a chapter 7 bankruptcy petition. Section 366 of the bankruptcy code required the utility company to restore services within 20 days of the bankruptcy filing. In that case, because the company did not require its other new members to pay a deposit for services, debtor was not required to pay a deposit.

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Section 366 doesn't apply to debtors that default after they make their adequate assurance deposit. If the debtor pays his deposit then later defaults on payment, the utility company is no longer subject to section 366 of the Bankruptcy code. In this type of situation the company's remedy is to terminate services under state law.

If a utility company violates section 366 of the bankruptcy code, debtor's relief is usually an order requiring the utility company to reinstate the service. Debtor usually won't be entitled to money damages unless the debtor was financially damaged by the termination of the service.