The Bankruptcy Code protects debtors from utility companies who seek to cut off service as a result of the debtor filing for bankruptcy. Specifically, 11 U.S.C. 366(a) provides that a utility may not discontinue service solely on the basis of the filing of a bankruptcy or because a debt owed to the utility was not paid. The protection however is limited. Under section 366(b), a utility may alter or refuse services if within 20 days after the petition date, adequate assurance of future payment for service is not provided. (The bankruptcy code gives a chapter 11 debtor 30 days to provide adequate assurance. See 11 U.S.C. 366(c)(2)).

Adequate assurance required by the utility companies is typically in the form of a cash deposit, however it can include a letter of credit; certificate of deposit; surety bond; a prepayment of utility consumption. See 11 U.S.C. 366(c)(1)(A). Depending on your location and the utility, the type of adequate assurance will vary so it is important to check with the utility. If adequate assurance is not provided, a utility company can lawfully terminate service after the 20 days. In practicality, adequate assurance will likely only be required if you have an outstanding bill which you are seeking to have discharged. Therefore, if you are considering filing or have filed for bankruptcy and you have an outstanding utility bill, you should be financially prepared to pay a security deposit.