70 Bankruptcy Filings A Day in Arizona

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More than 12,000 people and businesses in Arizona have filed for bankruptcy this year. That's 70 per day, and attorney Diane Drain says it will get worse because of the real estate market.



"Certainly, the numbers are astronomical for a lot of folks who really weren't putting the real estate market together with the bankruptcy market," said Drain.

She is seeing a type of client that she hasn't seen since the 1980s -- the so-called "financially healthy" client.

"They can't afford the consequences of all the real estate investments because the tax issues related to that, bankruptcy becomes their only way out," said Drain.

Arizona is caught in a national trend of 6,000 bankruptcies per month, on course for topping 1.5 million this year.

The untold story is families being torn apart by job losses and money issues, Drain said.

"When I meet with people, I can pretty much tell whether this is a couple that is headed for a divorce afterward or if this is a challenge that is going to make this couple healthier in the long run," she said.

Drain said many people are committing a cardinal sin by using their 401K's to get by.

"Those are monies that are protected, so my stomach hurts when I see people take their retirement accounts and put it into a black hole called the credit card," she said.

Many bankruptcies are driven by medical bills, according to a new Harvard University study.

"Almost two-thirds of bankruptcies involve medical problems," said researcher David Himmelstein. "That's up 50 percent from just six years ago."

Himmelstein said, "Three-quarters of the people who are medically bankrupt had insurance, mostly private insurance. But, it didn't protect them once they got sick. It's like an umbrella that melts in the rain."

Dr. Sam Benjamin, host of News/Talk 92-3 KTAR's "Primary Care," said the costs of health care are out of control.

"Health care is incredibly expensive because we have far too many specialists, far too many testing facilities and far too many technologies, most of which actually make no major contribution to your health. We need more primary care doctors."

Benjamin added, "There is clear and incontrovertible evidence that when communities have enough family physicians, for example, or they have a saturation of family physicians, the cost of health care goes down and the quality of health care and the length of life goes up... The more specialists that are in a community, the greater the cost of care, the higher the mortality and the greater decrease in the quality of life."

Doctors order things that people don't need and that drives up costs, Benjamin said.

"There's no reason to get a test that results in absolutely no change in your care, or worse, makes you sicker than when you started."

Benjamin said one way to guard against going broke because of health care costs is to make sure you have adequate health insurance coverage.