A recent study found that cancer patients are far more likely to file for bankruptcy than those who had never had a diagnosis.
Our Louisville bankruptcy attorneys aren’t shocked by these findings, unfair though they may seem. The reality is that medical bills are a major underlying factor in many bankruptcy cases.
Cancer patients, depending on their condition and the aggressiveness of the treatment, may rack up tens of thousands if not hundreds of thousands of dollars in debt. Insurance may only cover so much.
Researchers in Washington state analyzed data from some 400,000 adults, and divided them equally into two groups – those who had been diagnosed at some point with cancer and those who hadn’t.
Then, they cross-referenced that data with information regarding who had filed for bankruptcy protection in the last 15 years. Those who had been diagnosed with cancer were 2.5 times more likely to file for bankruptcy as those who had been cancer-free.
CredAbility, a national non-profit credit counseling agency, reported that 20 percent of its 100,000 clients seeking financial counseling in the last year cited medical debt as the primary reason they had chosen to file for bankruptcy. That’s up about 13 percent from what it was just a couple years ago.
It doesn’t help of course that high unemployment throughout the country has meant that many people have lost their jobs and, along with that, their health care coverage. Even those who have maintained steady employment are grappling with higher premiums and deductibles. Some health care plans are trading off lower monthly premiums in exchange for higher deductibles, but that means if you are diagnosed with a serious condition, like cancer, you’re going to be on the hook for a higher percentage of the costs.
Part of the problem is that most people don’t want to default on their doctor bills. You’re sick, someone takes care of you, you feel guilty if you don’t pay. So instead, patients put the charges on a credit card, often with a high interest rate, particularly if they have poor credit. That might help the problem in the short-term, but in the long-run, it can prove fatal to your finances.
The Washington study didn’t delve into the issue of insurance coverage, but there is no denying it’s a factor for many people. A 2006 study conducted by researchers at the Harvard Medical School found that of more than 2,300 who had recently filed for bankruptcy, more than 62 percent had done so in large part because of medical expenses.
That study found that on average, families who were bankrupted for medical reasons had about $18,000 in out-of-pocket expenses. It was higher for those without insurance – about $27,000 – but more than three quarters did have insurance.
The problem was there had been gaps in their coverage, with co-payments, deductibles and services that were uncovered. Other people ended up getting so sick that they lost their jobs, which meant they lost their insurance coverage as well.
The good news is that a Chapter 7 bankruptcy can allow these individuals to forge a fresh start financially. We urge clients to focus on their health first and complete all necessary treatments before filing. That doesn’t mean, however, that you shouldn’t explore your options if your treatments are ongoing and you know you’re getting in over your head. Call us today to learn more about how we can help.
If you need to speak to a Kentucky bankruptcy attorney, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.
Americans Who Battle Cancer Are Twice As Likely To Go Bankrupt, Even If They Have Health Insurance, May 16, 2013, By Tara Culp-Ressler, ThinkProgress
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Louisville Bankruptcy Lawyers – Borrowing Money Before Filing, May 29, 2013, Louisville Chapter 7 Bankruptcy Lawyer Blog