How To Put Together A Hardship Letter

What Is A Hardship Letter?

A hardship letter is something most companies will require to consider you for a “work out”. This is your opportunity to appeal to them to give you another chance. This should not be used to complain for what they have done or not done to make your situation worse.

This letter must be honest and represent the facts clearly. It must prove to them that the situation that caused you to fall behind is temporary and you are not in a position to make your payments on time.

You must also have a legitimate excuse for falling behind (which we shall discuss later) financial problems in itself would not be an adequate excuse. Remember, the hardship letter is only one piece of the workout.

The reality is lenders really don’t care what the person’s situation is; they simply want their money. The best option, however, is to contact the lender by phone and explain the situation so as to learn what the lender’s policy is in such matters.

A letter will likely get a response of “call this number” or something similar, if indeed there is a response at all.

If the party chooses to make the initial contact by mail the best thing is to keep it brief and to the point. Explain why it is not possible to comply with the original terms of the agreement, and request modification of the obligatory terms until your financial situation improves.

What Is Required In A Hardship Letter?

People understand that financial hardship sometimes occurs. None of us enter into a credit agreement knowing that at some point in the future we may have to back out or write a financial hardship letter.

A hardship letter is easy however; the hardship letter works with collection agencies in the event it has gone that far, where they will handle the process in exchange of accepting a small partial payment arrangement. If not, send it directly to the creditor that you first did business with.

Your letter needs to be sent to the collection agency (if they are involved) or to the original creditor to convince them to cut you some slack. The basis of the letter is anything that will prove why you are in the position you are in and why you are presently asking for help.

You must remember that hardship letters do not resolve your debts. And when you have completed your letter you must either fax the letter or mail it certified.

What The Letter Must Contain

Name: Your
Address: Your Address
Lender’s Name: and Your Loan Number or Identifying Information (other than name)

The letter should contain: the reason for default, an explanation of the hardship, the expected duration of the hardship, willingness to participate in a workout solution, desire to retain ownership (of what you have agreed or signed to with the lender).

Good Reasons

• Loss of Employment

• Medical Complications

• Disaster Victim

• Death

• Forced Relocation

• Disability

Poor Reasons

• You are a Student

• Legal Issues

• Filing Bankruptcy

• Overextended financially

• Pay Cut

• Purchased a Car

Basic letter breakdown: introduction, your offer to resolve your debt, your hardship situation, thanking them for their time, and your current contact information.