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Doctors increasing filing for bankruptcy amidst financial difficulties

Because of the far-reaching effects it has on credit, bankruptcy is a big decision for anybody to make. According to experts in the field of bankruptcy, more and more doctors have been forced to file for bankruptcy in recent years.

One reason for this, it is said, is that the weak economy has taken a toll on doctors' revenue as consumers reduce office visits and expensive elective procedures. Other factors are: decreases in reimbursements from insurance companies; changing regulations and the increasing costs of malpractice insurance, drugs and other business necessities.

But the increasing chapter 11 bankruptcy filings by physician practices are a bit different than the chapter 7 and chapter 13 filings usually used by consumers. Chapter 11 bankruptcy may be filed by businesses and individuals, but it is mostly used by corporate entities. In a chapter 11 filing, the debtor is in control of its business operations as a "debtor in possession," but is subject to the oversight and jurisdiction of the court.

In chapter 13, for personal filings, the debtor proposes a repayment plan and, when this is accepted by the court, outstanding debt is paid off over a 3 or 5 year period of time. This is referred to as a "reorganization" process.

Chapter 7, by contrast, is characterized as "liquidation" bankruptcy, because it requires the debtor to liquidate their non-exempt assets, using the proceeds to pay off creditors.

Personal bankruptcy is a big decision to make, but sometimes it is the smartest thing one can do given the circumstances. Those who feel they may be headed toward bankruptcy should consult with an experienced bankruptcy attorney to have their case evaluated.

Source: CNN Money, "Doctors driven to bankruptcy," Parija Kavilanz, April 8, 2013

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