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Part II of Chapter 7 Bankruptcy - "6 Months Food, Fuel, & Provisions"

Part II of Chapter 7 Bankruptcy - "6 Months Food, Fuel, & Provisions"
"""I am back with more information regarding what ""6 months food, fuel, and provisions"" actually signifies. We previously discussed whether grocery store gift vouchers qualify as exempt assets. Today I'd like to discuss a few aspects of prepaying your utility bills.

Let's recall the month of February in this year. A married couple filed for chapter 7 bankruptcy with the intention of providing six months' worth of fuel and/or food, as permitted by the exemptions. Specifically, they reported prepaid utility costs totaling $3,333.50 on their schedule C. Their trustee was opposed.

Thus, the debtors reasoned. As stated previously, Arizona's food and fuel exemption law, ARS 33-1124, allows for an ambiguous """"six months of food, gasoline, and provisions."" Because they could not simply purchase an equivalent quantity of electricity or natural gas and store it in their backyard shed, the debtors estimated their average monthly utility costs and submitted a six-month prepayment.

Is there a catch? The total amount listed on schedule C can be broken down as follows: """"the debtors paid Qwest $1,000; Arizona Public Service $1,400; the City of Phoenix $750; and Southwest Gas Company $183.50.""""

The court concurred that providing six months' worth of potentially hazardous and volatile fuel in kind is illogical, unsafe, and illegal (would you want your neighbor to store six months' worth of propane in their backyard shed?). Consequently, unlike the example of a gift card, prepayment was considered an acceptable substitute.

Nonetheless, the Court questioned whether these utilities actually qualified for exemptions under ARS 33-1124. Because the term 'fuel' has not been defined in Arizona case law, they turned to Webster, who defined it as """"[A]ny material, as coal, oil, gas, wood, etc., burnt to supply heat or power......[F]issile material from which nuclear energy can be obtained, as in a nuclear reactor......""""

Thus, the Court determined that the provision of natural gas or electricity falls within the definition. However, reservations with the telephone/Internet provider or the city do not qualify as fuel"""". Therefore, Arizona Public Service (electricity) and Southwest Gas (gas) are in, whereas Quest (phone/Internet) and the City of Phoenix (trash/water) are out.

What did we discover today?

Prepayments for utilities that provide """"fuel"""" may be exempt for a sum equal to six months of payment.
Internet/telephone and water waste are not 'fuel' and are therefore not exempt from similar regulations.

We can also infer from this that the Court does not consider the excluded utilities to be ""provisions,"" as this would alter their exemption status. In conclusion, I would like to repeat the query I posed earlier: ""What exactly is a provision?""

" - https://www.affordablecebu.com/

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"Part II of Chapter 7 Bankruptcy - "6 Months Food, Fuel, & Provisions"" was written by Mary under the Finance / Wealth category. It has been read 58 times and generated 0 comments. The article was created on and updated on 02 June 2023.
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