Education, Solid Career Won’t Shield You From Financial Woes

Today more than ever, our doctors are on the brink of bankruptcy.
Our Louisville bankruptcy attorneys know that having a great education and a solid career will not insulate one entirely from financial hardships.

The plight of doctors in recent years highlights just how bad the situation has gotten for everyone. Unfortunately, it’s a trend that has grown more common in recent years. In the past, we would typically see lower-income Americans as the primary Chapter 7 bankruptcy filers. Others might include the recently-divorced, laid off, ill, etc.

No more is this the norm. A 2011 report by the Institute of Financial Literacy found that in 2010, people holding bachelor’s degrees comprised 14 percent of bankruptcy filers. That was a nearly 4 percent increase from the year before.

Additionally, nearly 65 percent of bankruptcy filers were married, a number that increased by about four percentage points as well, from 56 percent in 2006 up to about 60 percent in 2010. That outpaces 51 percent of U.S. adults who are married, according to Census figures.

Even a solid income isn’t enough. The number of bankruptcy filers who made $60,000 or more was more than 9 percent in 2010. Compare that to the 5 percent of filings we saw from this group in 2006, and we’re talking a 70 percent increase.

In many cases involving doctors, assistance with planning from an experienced bankruptcy attorney can allow a physician to continue to maintain the practice, or at least continue practicing medicine following the discharge of a bankruptcy.

Doctors are experiencing a spike in both personal Chapter 7 filings, as well as Chapter 11 business reorganization bankruptcy filings.

A Louisville Chapter 11 filing is similar to a Chapter 13 filing in that it involves a creditor repayment plan. The main difference is that it involves a business, rather than an individual.

The American Bankruptcy Institute reports that Chapter 11 filings among doctors are on the rise. And these are not bad doctors or physicians who have landed on hard times because they were sued.

Instead, physicians are coping with this toxic combination of smaller insurance reimbursements, rising prices of malpractice insurance, overhead costs and tightening health care regulations.

Plus, they haven’t been immune to the weakened economy. Patients who are barely making enough money to put food on the table are going to hold off on elective medical procedures.

It doesn’t help that many physicians, while very good medical doctors, may not be skilled at running a business. Their practice may be their first foray into it. Caring for patients AND the books often proves a difficult task for a great number of doctors.

One case chronicled by CNN involved an oncology doctor who cared for hundreds of patients in an under-served area of Connecticut. Reimbursement rates for drugs and treatments for cancer began to dip. Expenses grew. Debt grew. Eventually, distributors of critical cancer drugs and supplies simply cut him off.

Filing for bankruptcy allowed him to hang on long enough to ensure each patient found other sources of care. As an aging physician, he made the choice to retire rather than start all over again.

But that is what a bankruptcy is all about: New beginnings. For doctors with many more years left of their careers, bankruptcy is a life raft that can get a medical practice and a physician’s personal finances turned around and once again pointed in the right direction.

If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.

Additional Resources:
Doctors driven to bankruptcy, April 8, 2013, By Parija Kavilanz, CNN Money
More Blog Entries:
Debt Burdens on Younger Borrowers Lessen, Economy a Factor, Feb. 25, 2013, Louisville Chapter 7 Bankruptcy Lawyer Blog

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