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Pay Off Your Debt! to Protect Yourself Against Malpractice Lawsuits

| December 14, 2018
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4 Critical Ways Doctors Can Protect Themselves Against Malpractice Lawsuits

Pay Off Your Debt!

If you have ever read any of my materials, you’ll know how passionate I am about debt reduction.

I hate debt. I think it’s a national plague that needs to be wiped out.

The rats of easy credit and federal support of education have bitten and infested our national body. This new bubonic plague has led to college costs nearly doubling inflation for the last twenty years.

Many of our brightest and driven folks (like you!) have been saddled with debt that can feel like a pus-filled blight ready to explode.

Consider that a true vaccine for malpractice protection is paying off your debts!

In my workbook, 5 Steps to Get Out of Debt for Physicians, I talk about how to identify, prioritize and eradicate your debt.

To make a long conversation short, by paying down your CONSUMER debts you are not accumulating money.

Instead, you are reducing your liabilities. There’s no asset that they can go after! In terms of malpractice lawsuits, this is a very good thing!

In the meantime, your cash flow and getting better and better and you can pay more and more towards your loans.

That means get rid of car loans, credit card debt, and YES even student loans BEFORE really socking away in a non-qualified account.

The tax-deductible debt like mortgage debt or business debt can be another matter. See me for more on this.

There are a few caveats to be aware of:

  1. If you are working for a non-profit entity and could be eligible for loan forgiveness forgiven loans, I strongly suggest NOT to pre-pay the debt.
  2. However, if you are a two physician household and are concerned about government support for PSLF, it may be worth choosing the lesser of the two student debts and going after one. It’s a tough decision and I’d definitely seek the counsel of a financial advisor who knows your situation and is VERY familiar with PSLF.
  3. I do believe strongly that there should be non-qualified savings from day one. So, don’t make the mistake of NEVER saving any money on the side and getting too focused on your debt. You want to build up your rainy day fund- just don’t save $5,000/month there when you have a bunch of other debts to pay off. Once you have your debts paid off, sure!
  4. Cash Value Life Insurance and Annuities are usually NOT a good substitute for a joint account. It is true that these investments can have SOME LIMITED protection and really depends on the state law. For example, some states may protect cash value up to $10,000 while others don’t at all.

Considering the cost of many of these vehicles, I would suggest they are not appropriate at all for young physicians and could be considered in some circumstances for physicians after 10 years in practice who have done a good job of saving who want tax deferral.

As a strategy for protection from malpractice lawsuits, I think they are very poor!

If you have missed any of the other 3 Critical Ways Doctors Can Protect Themselves Against Malpractice Lawsuits check out my blog at www.davedenniston.com/blog

Advisory services through Capital Advisory Group Advisory Services LLC and securities through United Planners Financial Services of America, a Limited Partnership. Member FINRA and SIPC. The Capital Advisory Group Advisory Services, LLC (CAG) and United Planners Financial Services are not affiliated.

The views expressed are those of the author and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation. In addition, the above list of articles and publications is not, and should not be constructed as, a recommendation, endorsement or sponsorship by United Planners Financial Services

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