Written by Craig D. Robins, Esq.
If the severity of the recession affecting Long Island can be measured by the number of electric utility bill delinquencies owed to the Long Island Power Authority, then Long Island has been hit very hard.
LIPA recently reported that there is now a record amount owed by customers who have been unable to pay their electric bills. Apparently, this figure has been rising steadily over the past two years.
As of the end of 2008, 157,217 residential customers were late in paying their LIPA bills. This number jumped to 165,900 as of May 31, 2009, representing a total amount of $121 million in arrears.
The shear amount of late utility payments is probably an accurate barometer of the Long Island economy.
LIPA Bills Can Be Discharged in Bankruptcy
I personally witness the extensive amount of LIPA arrears daily as I meet client after client in my Long Island bankruptcy practice. Although I don’t keep such statistics, I’d say almost half of my bankruptcy clients have LIPA utility bills that we include in their bankruptcy petitions.
Fortunately, utility bills such as LIPA are dischargeable in personal bankruptcy proceedings. By law, the utility company cannot terminate service merely because the customer has sought to discharge the utility bill.
What Does LIPA Do When a Customer Does Not Pay?
First, LIPA gives the customer a warning by mail.
Then, LIPA gives more warnings and makes phone calls to the customer over the next two months. However, LIPA will not terminate service and shut off power until there are at least three months of non-payment. This is an option of last resort.
Most customers will seek to work out some kind of payment arrangement. Even by paying a small amount, the customer can usually maintain electric service.
If the customer cannot work out a satisfactory payment arrangement with LIPA, then LIPA will terminate service. In May, LIPA shut off service for 2,150 nonpaying customers.
Even if a customer has entered into a payment arrangement or is on a budget, all electricity bill balances can be discharged in bankruptcy. Even filing a bankruptcy the day before a scheduled termination will prevent the termination from occuring.