Thomas Rather, D.C., age 30, was going through a divorce in November 2013 when he decided to upgrade the practice he purchased three years earlier. He bought the practice in September 2010 with the intention of upgrading and renovating it because the selling doctor had been using the same equipment, software and furniture for the better part of a decade.
Posted in Case Studies on Wednesday, February 28, 2018
Although what Dr. Rather had been using was functional, a new table was his first priority. Next on his list was obtaining new practice management software and converting his X-ray to digital. It was his goal to make these upgrades immediately and then renovate the front office furniture and décor within the next 18 months.
Dr. Rather believed these enhancements would help him better serve his patients and allow him to operate the practice more efficiently. From a branding perspective, he wanted to position himself in his community as a tech-savvy young doctor. What’s more, he was looking for a big project to take his mind off his contentious divorce.
Doctor Applies for a Loan
Thinking his credit was good and he was well-positioned financially to make these practice enhancements, Dr. Rather applied for a loan of $30,000 with Acme Financing Company on November 13, 2013, to finance the equipment and software. When Dr. Rather received a letter a week later from an Acme equipment financing representative declining his financing request, he was shocked.
After experiencing more than a little anxiety about the situation, Dr. Rather decided to pull a credit bureau report on himself, using the website annualcreditreport.com. The report revealed unusual activity, including inquiries from several companies he never did business with and several trade lines for account activity from unfamiliar companies. Moreover, Dr. Rather’s credit had been flagged for delinquent payments on accounts he never opened.
As he thought back on it, Dr. Rather remembered receiving an unusual phone call and a strange email in the past few months. There was the phone call that past summer in which a credit card company representative asked him to confirm his address to process his application—although Dr. Rather had not applied for a credit card at that time. Around this same time, Dr. Rather received an email that said there was a password change to his bank account. The email advised Dr. Rather to contact the bank if he did not initiate the password change.
At the time, Dr. Rather disregarded the phone call and email, thinking they were from telemarketers or phishing attempts. Now he was looking at the contacts in a new light.
Source of Problem Revealed
After spending several days researching the charges, Dr. Rather discovered his soon-to-be ex-wife applied for, and received, a credit card in his name. She had charged approximately $15,000 to the credit card without making payments.
Additionally, until September 2013, she had managed the household expenses and had not paid on Dr. Rather’s $300,000 student loan and other bills for the past few months. As a result, Dr. Rather had accrued thousands of dollars in interest and penalties, and some lenders had begun to turn the debts over to collection agencies.
In February 2014, Dr. Rather considered suing his ex-wife to reclaim the money she acquired fraudulently. However, he decided against pursuing legal action because she didn’t have any money and he would just incur more debt to pay costly legal fees for a case with an uncertain outcome.
Doctor Begins to Remedy Situation
Dr. Rather slowly started making payments above the minimum amount in the spring of 2014 in an attempt to resolve his debt. Although he made some headway toward reducing the amount he owed over the next nine months, he had to set aside his goal of upgrading his practice.
However, Dr. Rather still wanted to buy a new table, and he decided to try to borrow money for it. Although he was approved for an equipment loan, the interest rate was higher than he would have liked, due to his poor credit rating.
Consequently, Dr. Rather decided a better option to obtain the table would be to borrow money from his father, who had to take a loan from his 401(k). As a short-term solution, he also moved in with his parents for a year to be able to pay off his other debts more quickly.
After 15 months of paying $1,000 per month, Dr. Rather was able to pay his father back. He was ultimately able to resolve his other debts and make the remaining enhancements to his practice, but his poor credit followed him for years. Although the process added a burden to an already stressful time in his life, Dr. Rather was eventually able to have a successful chiropractic practice—albeit at a slower pace than he would have liked.
What Can We Learn?
By Ben Roach, Des Moines, Iowa
Pay attention to unusual phone calls and emails. These can be indications that someone is using your credit without your authorization. Be careful to avoid phishing or spoofing emails, and don’t provide any key personal, financial, or account information unless you are 100 percent confident in the legitimacy of the person requesting the information. If you are contacted by your financial institution about a password or account change you did not make, call the institution to investigate, especially if you are not certain of the legitimacy of the email.
Credit Bureau Reports
Pull a credit bureau report on yourself at least once a year. Also obtain a credit bureau report on your minor children and elderly parents. (If elderly parents are unable to help complete the information, you may need to include your Power of Attorney with the request.) Look for accounts you didn’t open, unusual inquiries for credit and general errors. Report anything that looks amiss to the credit bureau.
Make payments prior to the due date every month. Make at least the minimum payment. Be aware that late payments, collections and other credit issues can stay on a credit report for seven years or longer, and could result in legal actions being filed against you. However, taking steps to develop a good payment record can help offset a poor credit record.
Doctors who have poor credit may be forced to pay higher interest rates or even be unable to obtain credit at all. Some products and services, such as cell phones and cable, can be difficult to obtain when credit is poor. Additionally, some employers will pull credit bureau reports on job applicants, making it more difficult for the person to get hired.
Ben Roach is a shareholder in the Litigation and the Labor and Employment Departments at Nyemaster Goode, P.C., in Des Moines, Iowa. His practice focuses on employment law where he consults and is continuously involved in litigation for employers involving drug testing, wage and hour, discrimination, harassment, whistle-blower, retaliation, wrongful termination and noncompete issues.