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What's the No. 1 reason to file for bankruptcy?

When you think about bankruptcy filings, you probably assume that most people file because they got behind on their credit card payments. Maybe they put too much money on their credit card in order to buy a flight overseas, or they put too much money on their credit card to buy Christmas presents and they got in over their heads. Although many people do file for bankruptcy because of these kinds of financial mistakes, many people end up filing for bankruptcy for an entirely different kind of reason: medical debt.

Having debt problems because of medical problems is perhaps the most understandable kind of debt dilemma. When faced with the prospects of being sick or injured and debt free -- and the prospects of incurring credit card debt or going into debt to the hospital in order to get the care you need -- most people will happily go into debt in order get better.

Fortunately, medical debt is not viewed by banks and other lenders as an entirely bad kind of debt. Many lenders view medical debt to be exactly what it is -- something you probably couldn't avoid incurring, and something that doesn't have any kind of bearing on your true level of financial responsibility. Nevertheless, medical debt can be problematic -- especially if the owner of the debt tries to pursue payment in court.

Fortunately, bankruptcy could help you if you're in the throes of a medical debt problem. If you're suffering from medical debt that's so high you'll never be able to pay it off, be sure to understand your legal rights and options under bankruptcy law.

Source: USA Today, "This is the No. 1 reason Americans file for bankruptcy," Maurie Backman, accessed Feb. 01, 2018

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