Of all the events that could lead to bankruptcy - divorce, change in mortgage payments, layoffs - sustaining a serious injury is perhaps the most frightening, largely because it's completely out of your control. In particular, brain and spinal cord injuries can be financially devastating, since damage to the brain can be widespread and unpredictable.
In a recently published study in Medical Care, researchers found a link between victims of brain injuries and bankruptcy filings.
The study followed 6,345 adults in the state of Washington who were hospitalized with spinal cord or brain injuries between 1991 and 2002. It also monitored U.S. Bankruptcy Court records to determine whether or not patients' illnesses affected their likelihood to file bankruptcy.
Researchers found that 3.5% of patients filed for bankruptcy within five years of their injuries. This number may not seem especially high but consider this: subjects were 33% more likely to file bankruptcy after their injuries than before.
Most people would assume that this jump in filings was the result of subjects' inability to afford medical expenses in the years following the injury. But the study suggests a different explanation. In fact, researchers found that those who sustained milder injuries were actually more likely to file bankruptcy than those whose injuries were more severe.
The study conjectured that mildly-injured subjects were less likely to have access to large sums of money (for example, from settlements or jury verdicts), and so had to cover more medical bills out of pocket.
Additionally, the study postulated, those who suffered more minor injuries may not notice the negative effects until after the statute of limitations for suits or settlements has expired. This, too, would mean the subject would have to foot the bill, and could end up in financial trouble.
Another of the study's findings was that subjects' insurance policy types influenced their likelihood to file for bankruptcy. For subjects who had commercial medical insurance, the rate of bankruptcy was twice what it was for those who received Medicaid insurance.
This may seem like an arbitrary relationship, but the researchers hypothesized that subjects who had commercial insurance also had jobs with paychecks that permitted them to acquire car payments, home loans, and credit card debt, all of which would make a person more vulnerable to bankruptcy. After their injuries made them unable to perform their jobs, the debts accumulated would have remained.
The insurance/bankruptcy relationship was complicated by the finding that subjects with Medicaid insurance had a higher relative risk of bankruptcy: they were twice as likely to file bankruptcy after their injuries as they were before.
View in this light, the 3.5% increase in bankruptcy filings can be better appreciated.
No matter what the exact statistics are, one thing should be clear. If you have suffered some sort of injury that has made you unable to work, or if you are struggling with your finances for another reason, it can be a good idea to contact an injury lawyer or a bankruptcy lawye sooner rather than later.