ARE DEBTS FOR CELL PHONES DISCHARGEABLE IN BANKRUPTCY?
When going over credit reports of Minnesotans looking for debt relief, I almost always find an entry for Sprint, or Verizon, or T-Mobile, or other cell phone companies. Just like credit cards and medical bills, debts to cell phone companies in Minnesota are completely discharged in bankruptcy.
What does discharge mean? It means that you don’t owe any debt on the cell phone (either to purchase it or for service) that came into existence before the day of filing for the bankruptcy.
If you continue to use cell phone service from that company, then they will charge you only for the new service used after the date of bankruptcy filing. For example, if you file bankruptcy on May 1st, then they can charge you new service for May 1st through May 31st, but nothing for April or March.
SO HOW DOES IT WORK WITH THE CELL PHONE COMPANY AFTER BANKRUPTCY?
Luckily, they can’t disable the cell phone or brick the cell phone. They can decide to discontinue service and force you to use a different phone provider, but they cannot destroy the phone.
If you want to keep using the same cell phone company, then they will generally allow you to stay and pay only the new charges. You can also use the bankruptcy as an opportunity to switch to a different cell phone company. You can do this even if you haven’t paid off the phone yet, so filing bankruptcy can be a great way to save on your monthly cell phone bill.
WHAT ABOUT IF THE CELL PHONE IS LEASED?
When a phone is leased you technically have to return it to the cell phone company because it is their property. Most of the time, however, the cell phone company doesn’t want to spend the time to recover it, so they just let you keep it and it works the same way as if the phone weren’t being leased.