Internet's first get-out-of-debt community - 123,000 members

Hi all -

I have a friend who is converting from Chapter 13 to Chapter 7 due to foreclosure on their home (a familiar story these days, sad to say), and I don't know how to help him with this question.

So maybe you can shed some light on this for me!

He has an outstanding utility bill for gas & electric from his foreclosed house and he has been paying on that, plus his utility bill for the new house - both accounts have been combined together, making a pretty high bill to pay.

Now that the foreclosure is underway, his attorney has advised him to convert to a Chapter 7 to avoid being hit with the balance left over after the mortgage company resells his foreclosed home. The utility bill will be included in this. Now comes the sticky part. He is renting his new home, and the utility bill is in his name as the tenant, but the landlord has a note on the account that if it ever gets cut off, the utility company needs to contact the landlord to let them know, so they can protect the property if it happens during the winter.

Now...with that said, does that mean that in the event of Chapter 7 bankruptcy, the utility could go back to the landlord and inform them of the Chapter 7 bankruptcy, and demand that the landlord pay the arrears on the utility account??

I appreciate your help - I've been able to answer all his other questions...except this one!

Posted: Thu May 15, 2008 8:14 am Subject:

I know that in some states, the utility can certainly take an unpaid bill and hold it against the landlord. How BK affects that, I'm not sure. Especially since part of the balance is from a different property that the landlord has no interest in.

I have seen some of my customer's bills that have filed a BK and included a utility. On the statement, I always see an adjustment for the BK'd portion that brings the account balance to zero. And then the balance continues every month with any new charges after the BK.

I would tend to say that because the debt itself will be discharged by operation of law, they could not go after the landlord; or the landlord could argue that the debt was extinguished when tenant discharged the BK.

I'm not certain, though...

*Name:
*Email:
*Phone:
*Zip:
Debt

	* denotes required field

Internet's first get-out-of-debt community - 123,000 members

Conversion of Chapter 13 to Chapter 7 - Utility Question

Members Area

Free Debt Counseling

Ask the community

Featured Discussions

Featured Articles

Question of the Month

Useful Links

Recent Forum Discussions

Recent Blog Post