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Bankruptcy and Cancer

In most bankruptcy cases, at the 341 hearing, the bankruptcy trustee will ask the debtor, “How did you get into this situation?” Our Boston bankruptcy clients are instructed to answer honestly, albeit briefly. The answers vary, of course. In Massachusetts bankruptcies, anecdotal evidence shows that there are not as many medical bankruptcies as reported nationally. However, in a fascinating academic study it was shown that there is a direct correlation between cancer and subsequent personal bankruptcy.

The study, presented by Dr. Scott David Ramsey, of the Fred Hutchinson Cancer Center, in Seattle, was conducted in Washington State. It linked the Western District of Washington bankruptcy court records with the National Cancer Institute’s SEER (Surveillance Epidemiology and End Results) for Washington State. The study was published by the Journal of Clinical Oncology and included examining 231,799 cancer cases. The results of the study showed that 2.1% of those Washington State cancer cases, or 4,805 people, filed for a “fresh start” personal bankruptcy following the diagnosis. This includes Chapter 7 liquidation and Chapter 13 reorganization personal bankruptcies.
The study further pinpointed the relationship between the specific type of cancer diagnosis and bankruptcy: victims of lung, thyroid, leukemia and lymphoma cancers were most highly correlated with subsequent bankruptcy. Uterine, colorectal and melanoma cancers were the middle group. The lowest cancer to bankruptcy rates were breast and prostate cancers.
The cancer rates were as following within five years of diagnosis:
Lung cancer 7.7%
Thyroid cancer 4.8%
Leukemia/lymphoma 3.6%
Uterine 3.2%
Colorectal 3.1%
Melanoma 3.0%
Breast 2.9%
Prostate 1.7%
As we understand the study, following surgery, lung cancer, colorectal cancer and breast cancer victims were more likely to file for bankruptcy. The same is true for those that were treated with chemotherapy.
The other statistical factors seemed to be: for those who suffered from lung cancer, married people were more likely to file for bankruptcy; and, white people who suffered uterine, breast and prostate cancer were less likely to file for personal bankruptcy.
For all of those who had cancer over age 65, there is a lower bankruptcy risk, across the board for every type of cancer. This may be that those folks have social security, or a set income and are not as reliant on working to pay their bills. Moreover, they are more likely to have Medicare as their health insurance, which notwithstanding the political and economic factors, is a good, solid, medical insurance program.
The study was for adults, age 20 and over. It was conducted for the period of time between 1995 and 2009. Thus, it included the mad rush of personal bankruptcy filings in 2005 when the law changed (on October 1, 2005) and the first wave of mortgage bankruptcies following the “great recession” of 2008.
The several researchers that authored the study are Dr. Scott David Ramsey, Dr. Catherine R. Fedorenko, Dr. Kype S. Snell, Dr. Anne C. Kirchhoff, Dr. William Hollingworth and Dr. David K. Blough. They presented their research at the American Society of Clinical Oncology (ASCO) Annual Meeting on June 2, 2011. They work in three institutions: The Fred Hutchinson Cancer Research Center, in Seattle, Washington; the University of Bristol, Bristol, United Kingdom; and, the University of Washington, Seattle, Washington.