Bankruptcy More Likely for Cancer Victims

June 20th, 2011 Ronald Unruh Leave a comment Go to comments

A recent study conducted by researchers from the Fred Hutchinson Cancer Research Center found a troubling link between illness and debt: people diagnosed with cancer, it seems, are more likely to file personal bankruptcy.

Here’s a closer look at the study, conducted in western Washington state, and what it found:

Almost 232,000 adults with cancer were studied over a period of 14 years;
The longer cancer patients lived, the more likely they were to file for bankruptcy;
On average, a person five years out from a cancer diagnosis is four times more likely to file for bankruptcy than a healthy person;
After one year of treatment, cancer patients are twice as likely to file for bankruptcy as the general population;
The median period between cancer diagnosis and bankruptcy filing is two and a half years.

One of the unfortunate truths about illnesses like cancer is that they can damage a person’s finances in two ways: with seriously expensive medical debt and with the potential for missed work time and even job loss because of an inability to work.

This leads many into a devastating cycle because most Americans have health insurance tied to their jobs: if they lose their income, they also lose their insurance. Which can lead to higher medical costs … which can lead to bankruptcy.

While this study may be upsetting, it isn’t earth shattering: medical bankruptcy is a familiar term to the millions of Americans with paltry health insurance or none at all. But this study, because it drew from government records on both cancer diagnoses and bankruptcy filings, is the first definitive, hard-number account of the relationship between cancer and bankruptcy.

What else did the study uncover that was noteworthy?

Lung, thyroid, leukemia and lymphoma patients have the highest risk of filing for bankruptcy in the period following their diagnoses.
People over age 65 have much lower bankruptcy filing rates than younger cancer patients. The researchers attribute the financial help of Medicare, the government-sponsored health insurance available to senior citizens, to the relatively low bankruptcy rates in this group.
Since the beginning of the financial crisis, bankruptcy rates among cancer patients have increased.

Bankruptcy filers often cite traumatic life events (like divorce, injury and illness) as a factor that led them to need bankruptcy protection.

The good news is that medical bills can be discharged in bankruptcy court. In both Chapter 7 and Chapter 13 bankruptcy, the court has the authority to discharge (that is, legally excuse filers from paying) certain unsecured debt. Medical bills usually fall into this category.

If you’re struggling with medical bills and want to learn more about your debt relief options, you may want to speak with a bankruptcy lawyer.

Financial Freedom Expert