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Doctors aren't immune from bankruptcy upswing

Vulnerable not only because of their own finances, physicians also are affected when their patients get overwhelmed with debt.

By Katherine Vogt, amednews staff. Oct. 6, 2003.

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Physicians are among those wincing from a sharp surge in the number of individual bankruptcy filings over the last year.

Fueled by a weakened economy and increased unemployment, personal bankruptcies in the United States reached an all-time high over 12 months with 1.6 million filings for a yearlong period that ended June 30, according to the American Bankruptcy Institute. The number was up 10% from the same period a year earlier.

Though data were unavailable on which professionals filed the most bankruptcies, experts say doctors are among those who have become overwhelmed by debt and are increasingly asking for help to get relief. The trend is expected to persist indefinitely.

Whether they are experiencing lower reimbursements, buried under debt from loans or reeling from an expensive divorce or hefty malpractice judgment, physicians have plenty of reasons to file for bankruptcy, experts say.

"[Physicians] are really no different than other consumers," said Miami bankruptcy attorney Andrew Hellinger. "Some have household debt trouble and extended themselves on credit cards, some of them will have medical malpractice judgments that they can't pay. ... Others have fallen on hard times as the economy has taken swings and the insurance industry has changed how they do business with them."

Physicians may have some vulnerability to bankruptcy that is specific to their profession, said Marianne Culhane, resident scholar at the American Bankruptcy Institute. For example, she said fear of malpractice judgments may have led some physicians to dubious asset protection and tax-avoidance schemes, which can cause financial ruin. Also, she said some physicians might have been pulled into bankruptcy because they had personally guaranteed loans tied to a practice that failed.