How to Write a Financial Hardship Letter to Creditors

By Chris Winston

A hardship letter is a statement written by a borrower to a creditor describing a change in his financial situation. Many creditors require a hardship letter when the borrower requests financial assistance or alternative payment options. The letter should provide a detailed explanation of the type of assistance the borrower wants, the cause of the financial hardship and the current financial situation leading to non-payment of debt. Once a creditor has the full picture of the borrower's financial situation, he may approve an alternative payment plan, a temporary forbearance or other financial options.

Step 1

Write your name, address and phone number at the top of your letter and write the date underneath.

Step 2

Provide the creditor's contact information underneath the date. Include the employee name, specific department, company name and address. Create a subject line underneath the creditor information by writing your creditor's company name and your account number. Write your subject line in all capital letters or in bold print so the account information is easily seen by the reader.

Ready to start your LLC? Start an LLC Online Now

Step 3

Address the letter to the creditor's employee. If you don't have a specific creditor employee name, address the letter "Dear Sir or Madam" or "To Whom it May Concern."

Step 4

State your intent in the first paragraph. You may ask the creditor to postpone payments, review your financial situation for an assistance program or determine your eligibility for other payment options. Tell the creditor exactly what you want in a cordial manner.

Step 5

Explain the change in your financial situation in the second paragraph. If you lost your job, suffered a serious injury, could not sell your home or endured another type of event that affected your finances, you must communicate this, in detail, to your creditor. Provide the date of the event and any details that contributed to the change in your financial situation.

Step 6

Describe your current financial situation in the third paragraph. If you don't earn enough income to pay all of your monthly bills, state your monthly income, your monthly debt and expenses and the exact amount of money you are short every month. Explain any financial details that add to your problem, including your lack of a savings account for emergencies or a bad credit score that prevents you from obtaining additional credit. Explain how long you think your current situation will last and how you think the requested assistance may help alleviate your financial hardship.

Step 7

Refrain from making accusations, placing blame, complaining or insulting the creditor's company or any other entity in the letter. Keep your tone respectful. Remember that you are asking for help and make sure to highlight the fact that you are suffering a financial hardship that is seriously affecting your life.

Step 8

End your letter by providing instructions on how and when to contact you to discuss the matter.

Step 9

Print your name at the bottom of the letter and sign your name.

Ready to start your LLC? Start an LLC Online Now
How to Write Bequests in a Will
 

References

Resources

Related articles

How Can I Determine the Date of My Bankruptcy Discharge?

When you apply for credit after completing bankruptcy, such as a home mortgage or car loan, new lenders may want to confirm that your discharge has taken place. To provide proof of your discharge date, you'll need to obtain a copy of your discharge order.

How to Address the Executor of an Estate in a Letter

Think of your executor as the co-pilot of your assets; when you are no longer able to captain your affairs, she takes over the controls and administers the estate through probate. Many people identify the person to administer their estate in their written will. If you do so, it also makes sense to leave a letter to assist your chosen executor to locate beneficiaries, identify assets and verify debt. This kind of verbal map of your holdings enables the executor to facilitate probate and wind up your estate as quickly and efficiently as possible.

Schedule F Bankruptcy Discharge

Bankruptcy means a fresh start – a court order protects you from collections and lawsuits, and eventually, the court discharges (cancels) some of your debts. You must report your assets and liabilities, and you will be required to sell your non-exempt property to repay creditors (in Chapter 7) or set up a repayment schedule (in Chapter 13). As your bankruptcy case begins, you'll complete a Schedule F, and it's vital to know the difference between a secured and unsecured debt when preparing this form.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Rent After Bankruptcy & Foreclosure

Bankruptcy and foreclosure have a devastating effect on your credit scores and your poor credit presents a problem when ...

How to Respond to a Divorce Complaint

You must respond to a divorce complaint to preserve your rights and have a voice in the proceedings. If you don't ...

How to File a Claim for Money Owed in a Chapter 13 Situation

In the Chapter 13 bankruptcy context, a Proof of Claim is a form used by creditors to notify the bankruptcy court that ...

When Filing Bankruptcy Who Is Notified?

When you file for bankruptcy protection, the court issues an "automatic stay" to protect you from collections, ...

Browse by category
Ready to Begin? GET STARTED