Cancer and Bankruptcy – Or How Debt Kicks You When You’re Down

A study from the Fred Hutchinson Cancer Research Center in Seattle found that cancer patients are 2.5 times more likely to file bankruptcy than people without cancer.  The study was published in the journal Health Affairs.  The risk is even higher for younger cancer patients.  This confirms what bankruptcy lawyers have known for a long time: many people don’t slide into bankruptcy, they are catapulted into bankruptcy or – put another way – debt has a way of kicking you when you are down.

Cancer is an extreme example of how a sudden and unexpected life event can rocket someone into bankruptcy.  The study’s authors highlighted a few of the reasons that cancer correlates to an increased risk of bankruptcy filing: 1) cancer is extremely expensive, even with health insurance; 2) cancer treatment leads to income disruption or job loss; 3) support networks are unable to take up the slack; and 4) existing debt becomes unmanageable.  These factors, however, are just as present with any sudden and unexpected life event, not just cancer.

Debt problems have a way of kicking you when you’re down.  Most of us – bankruptcy lawyers included – have personal debt, whether it’s student loans, mortgages, car loans, or credit cards.  The bottom line is that debt is a necessary part of everyday economic existence.  What none of us want to admit is that it doesn’t take much for your economic existence to be knocked off balance.  You can be the most responsible credit card user out there and have a modest mortgage, but if you lose your income for six months, you are almost certainly going to start missing payments.

Once you start missing payments, you will begin to spiral deeper into debt.  It’s simple.  You have a mortgage, you have to pay your utilities, you have to buy food, and you go through an income disruption.  If you don’t pay your mortgage, your home will go into foreclosure.  If you don’t pay your utilities, the lights will be shut off.  You have to buy food.  Even at that minimal level of existence, it is easy to spiral into debt if you lose your income for even a few months.

Most of my clients have been financially responsible their whole lives.  It just takes a few months of financial disruption like lost income or unexpectedly large medical bills for them to spiral into debt and end up in bankruptcy.  The bottom line is that any kind of disruption whether it is extreme and life threatening like cancer, a layoff, a furlough at work, or anything that radically increases your expenses or radically decreases your income can put the most responsible person into bankruptcy.

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