5 May 10

Debt Troubles For Doctors?

A recent BMA study has highlighted the debt problems being encountered by newly qualified GPs. The study stated that the average junior doctor graduated with a debt of almost £23,000 which was up by 20% over 2008 levels. (Source – AISMA press release 7 April 2010).

“The practical consequences of the study’s contents are now starting to be felt at grass roots levels,” warned Jeanette Brown of Dodd & Co Chartered Accountants. Jeanette’s job combines the roles of Medical Accounting Specialist and Licensed Insolvency Practitioner. “We’ve had the first indicators that junior partners hoping to buy into practices may not be able to get bank loans as a result of already being overburdened with personal debt. Whilst many banks are still open for business as far as doctors are concerned, new partners may find their requests for buy-in loans turned down if they already have a combination of student loans, credit card debt and large mortgages. Whilst this is difficult for those wanting to buy in, we must not lose sight of the possible knock-on effects of those wanting to retire and be paid out by the new money coming in.”

Jeanette goes on to comment that whilst bankrupt doctors are relatively rare, the requirement to give practical insolvency advice to GPs who would be considered to be high earners is not unknown. “It’s a commonly held misconception that only low earners get into financial difficulties but in my experience it is simply not the case. Higher earners can have money troubles too – and they need to be properly advised.”