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Thank you for the advice…

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  • Avatar Starchanger 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6
    Joined: 04/17/2019
    Earnest refinancing bonus

    Thank you to those of you who read my post with a grain of salt and gave me helpful or sage advice.  This time is too raw for me, after everything I’ve done to survive my career thus far, to deal with the callousness and judgemental tone of some people’s responses.

    #207170 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4473
    Joined: 05/13/2011

    Well, we can start with the easy stuff- the student loans aren’t going away in bankruptcy, but the rest should. That gives you a lot of leverage in negotiations.

    I think question # 1 is what are you going to do for income once the practice is closed? Is hubby yet willing to go back to work? Are you going to go practice your specialty as an employee? Between those two and the pension, you can probably service the student loans anyway.

    Obviously the car needs to go. Maybe some of the equipment needs to go.

    The staff needs to go too if you’re going to close the practice, and the sooner the better. If you’re headed to bankruptcy, why are you raiding your 401(k)? It’s likely protected.

    I think your first step is a bankruptcy lawyer so you can wrap your head around whether that is a good option or not.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #207259 Reply
    IntensiveCareBear IntensiveCareBear 
    Participant
    Status: Physician
    Posts: 235
    Joined: 12/22/2018

    You are doomed… actually I have no idea. It was quite a long post.

    Personally, you won’t / can’t do chapeter 7 as someone with high earning potential, though. Lawyers, skilled trade, docs, vets, engineer, etc or anyone with six or even decent five figure average profession income would be laughed at if they asked a judge for chapter 7. Your attorney will detail this.

    You will do chapter 13 personally (no forgiveness, approx. 5yrs payment plan using approx. 20% of your income… then some forgiveness – not student loans or taxes or etc). Retirement accounts are protected up to insane limits (they were even more insane before Enron and GFC)… so do NOT touch IRA or 401, etc… you should actually build them if you can (but attorney will have to disclose any contributions right before filing).

    So, moral of the story is: get a qualified attorney asap and learn about that chapter 13 process. Have your stuff together and much more concise than the novel written above. Just like a loan app, you just need to basically prepare a financial statement: all your debts listed, any assets, and monthly bills on a monthly/annual basis. Your business might file one kind of bankruptcy and you personally do chapter 13. Ask the bankruptcy attorney. Apparently a personal case costs $3-5k or more, but I have no idea for personal and biz cases. I just play poker with a few of them… hilarious guys typically. They have even better stories than paramedics… sorry you are now one of the stories. Enjoy and GL

    "Hmm, that sounds risky." - motto of the middle class

    #207261 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 665
    Joined: 06/18/2018

    [Post moderated after multiple complaints from forum members. Sometimes tough love is called for, but this was probably over the top.]

    Your practice is toast…call the code, quit wasting time, money, and energy trying to save something that’s already dead. Find an attorney who knows what they’re doing and wind it all down as quickly as possible. Then, you should look for an employed position doing whatever it is that you do. Get a steady paycheck and plan on living on a fraction of that. Leaving the HCOL area you’re in and heading somewhere LCOL would probably help you out. You need to start saving because you’re already decades behind. Never, ever borrow money to try to run a business again — you’re not cut out to be an entrepreneur. Don’t take out 50k car loans (or, any car loan). Never buy a house again, or if you do, make sure you put at least 20% equity into it. Plan on working well into your 60s. Cut up your credit cards, you don’t know how to use them responsibly. You’ve got a skill set that should enable you to earn a decent living. Good luck learning to live within your means and finding some better people with whom to surround yourself.

     

     

     

     

    Avatar DCdoc 
    Participant
    Status: Physician
    Posts: 535
    Joined: 06/14/2016

    I wish you the best of luck. You’re in a tough spot. Hopefully others have better financial advice, but I recommend you speak with a counselor or psychologist to deal with some of the stressors in your life. While I’m not a psychiatrist, others here are. Perhaps you could be screened for BPD. While seeing a counselor isn’t going to alter the present financial concerns, at the end of the day, it is your health and wellness that matters most.

    #207263 Reply
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 880
    Joined: 02/06/2016

    The principles we live by are:

    1) always spend less than we earn, and

    2) never borrow any money for an asset that decreases in value

    These rules are quite simple, but they have worked well for us.  When I didn’t have the cash for a new car, I paid $500 cash for a very old Toyota Camry and it got me where I was going for a couple of years.  As a result of living well within our means, life is very low stress.  You have the potential to get to such a place, but you would have to completely change your approach.

    #207268 Reply
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
    Posts: 880
    Joined: 02/06/2016

    Oh, and as far as your next best steps right now, close the practice and find a salaried position.  Move into a really cheap rental apartment, maybe a small one bedroom.  Purchase a really cheap used car for cash so you can get around, and make sure it is worth almost nothing so they don’t take it away from you in bankruptcy.  Cut up the credit cards and pay cash for everything you buy.

    #207269 Reply
    Liked by Zaphod, jfoxcpacfp, ZZZ
    Avatar trebizond 
    Participant
    Status: Resident
    Posts: 122
    Joined: 12/31/2017

    Rough situation. It seems like there’s been a lack of insight on managing finances throughout. I think hope is not lost, however.

    You’ll have to file bankruptcy (whether ch 7 or ch 11 I have no idea). So you need to hire a GOOD bankruptcy lawyer for this. My parents had one when they filed Ch 7 and it was worth it. Don’t go cheap on the lawyer, its critical that s/he negotiate the best deal possible.

    The student loans you may need to consolidate to a lower interest. That may need to happen before the bankruptcy because the bankruptcy itself could wreck your credit further.

    Concur that you probably should never again have a credit card. Ever. Use cash and debit cards.

    Sell the car, buy a cash only beater.

    Live thriftily. No new clothes. No vacations. No eating out, prepare your meals at home, budget food expenses. No expensive cable package.

    Sell the boat.

    Rent an apartment and look only at the essentials. Safe, clean, enough space for 2 people. It doesn’t need granite countertops, hardwood floors, French doors, balconies, etc. You won’t be doing much entertaining.

    Give up on buying a home until you have had stable employment for 5+ years, no CC debt, no student loan debt.

    Your husband will need to go out and find some sort of gainful employment.

    Stop extracting money from your retirement funds since they are protected in bankruptcy.

    You’ll have to give up on the dream of being an entrepreneur. The unstable job situation may reflect some interpersonal difficulties with your colleagues/employees in the past. Honestly, I have no idea and don’t want to speculate. But if you’ve had recurrent conflicts with people during training or thereafter, it may require a change in your attitude or communication skills with others. Again, not sure and don’t want to accuse you of anything, but it’s essential that if this is a factor in your unstable job situation that you fix it.

    Find an employed job doing what you do. Invest in 401K to the employer match at least, and then some.

    I really wish you the best of luck. My family went through a prolonged period of unemployment and eventually a bankruptcy, had to move to a different state, etc. All is not lost. But a lot needs to change to pull you out of this hole.

    Highly recommend your read Dave Ramsey since he covers a lot of the above.

    Avatar Allixi 
    Participant
    Status: Physician
    Posts: 103
    Joined: 03/16/2016

    Excuse my ignorance

    What does “DPC” stand for? “Direct primary care” wouldn’t make sense for a surgical subspecialist (sounds like ophtho maybe).

    Is that some sort of acronym related to having cash-only practice?

    #207308 Reply
    Liked by HandFellow
    Avatar AR 
    Participant
    Status: Physician
    Posts: 827
    Joined: 03/10/2016

    I don’t know anything about bankruptcy, but here’s a question for anyone who does.  What is to stop someone who is OP’s position from getting “divorced” and making sure husband gets all the assets and then filing bankruptcy as a single person?  Presumably, you can’t do the divorce immediately before the filing, but if you can see the train wreck coming and you do it a year before or something like that, would it work?

    #207312 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 234
    Joined: 01/10/2016

    You are likely not going to be able to file for chapter 7 if you plan to continue to have income even at the military retirement plus disability level.  You are going to have to file for chapter 13 and you are going to have to get you ducks together to manage that.  Chapter 7 is for people with no means for an income.  You are a physician and it is from what I understand almost impossible to get away with chapter 7 unless you can demonstrate no ability to work.  Talk to a bankruptcy lawyer and you may find it easier to do some self reflection and push through and restructure debt in a way you can retire on social security. Bankruptcy is really not that helpful for people with means.

    #207313 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 234
    Joined: 01/10/2016

    Sorry I didn’t read through to end. Since most debt is in business you can discharge business debt chapter 7.

    #207342 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3425
    Joined: 01/21/2016

    Sorry about your circumstances. I see a lot of self-inflicted wounds in the story, and I also see a career in tatters, in addition to the financial life being a complete mess.

    The biggest question to me is how are you and your husband going to earn money going forward. I agree that an employed position for you is probably best, in an unglamorous LCOL area. Your husband, unless he is an invalid, must contribute. You can earn your way out of all of this, but it will require a lot of discipline and sacrifice from both of you.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #207360 Reply
    Avatar adventure 
    Participant
    Status: Spouse
    Posts: 1168
    Joined: 10/24/2016
    What I’m hoping for is “new eyes”

    Click to expand…

    … how bad is the situation though? Forgive me if I missed it, but I don’t see it. For example, do you just have $0 assets, 0 earning, and need a fresh start, or are you $1,000,000 in the hole + student loans?

    So here we are today.  Personal bills all paid, but I have a trashed credit rating (high 600s…debt to income….still no missed personal payments in 30 years!), and all of my “machine” payments are behind by 3 months.  Business is slow

    Click to expand…

    I’d suggest a clear idea of how messy things are, and I’d look for a fresh start, using the advice found above.

    We have nothing of real value left except our boat…..it’s our HOME….but apparently isn’t protected under homestead laws in our state.

    Click to expand…

    Like a real boat?

     

    Overall, knowing where you stand today (balance sheet, what do you have, what do you owe), what you can make there now would help you make a plan going forward. You have an oppourtuity to make a plan, and go forward.

    #207401 Reply
    Avatar Crockett’sRiver 
    Participant
    Status: Physician
    Posts: 169
    Joined: 05/24/2018

    I think you asked two specific questions: how do I close down a practice? and how do I emerge from bankruptcy with a clean slate?  Hopefully others with more knowledge will weigh in, and hopefully you have good professional advice in the form of a bankruptcy attorney.

    You will not have an entirely clean slate because your student loans stay with you, so any financial plan needs to include paying those off.  You will also need to make some painful changes: probably moving from HCOL, husband working (and the CPA who told you he shouldn’t bother working because his income would get eaten by taxes doesn’t understand the principle of marginal and effective tax rates), ditching the expensive car.  I know you are a car person, but that’s a luxury right now.  As others have said, get rid of credit lines and pay cash.

    You say you never boarded because you didn’t want to practice your speciality.  Is this because you dislike the speciality itself, or the jobs that you had after residency?  if there is any chance of resurrecting a high-paying surgical speciality career, if only for long enough to get yourself back on solid footing, then do it.

    Be an employed physician for a while and let someone else take care of running the practice.  Now, here is the part where I want to tread gently:  I believe you when you say your residency and subsequent jobs were toxic. There are plenty of awful physician jobs out there.  On reflection, are there any red flags that might have warned you before you got into those situations?  Or lessons learned that you can take to future jobs?  Plenty of people on here, myself included, have been through bad jobs and come out the other side and may be able to offer advice.

    You sound like a hard worker.  Best of luck to you as you move forward.

    Career and finance for PCPs at ADoctorsWorth.com

    #207416 Reply

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