A hardship letter can be simply defined as an appeal letter to a creditor or a utility provider requesting a review of repayment terms. A hardship letter to creditors can be occasioned by various unexpected incidences in our lives such as sudden loss of jobs, a medical emergency, loss of property or any other economic hardship. The purpose of a hardship letter is to describe in the borrower’s own words why he or she is not able to make repayments as expected. It is to help you negotiate debt successfully on your own. The most important thing with a hardship letter is to include actual and factual reasons for the hardships and the plans that you’re making for the future.
Types of hardship letters to creditors
This is not an exhaustive list of reasons for writing a hardship letter. You could a write a letter to request reduced payment. In this case, you want the premiums for repayment reduced to allow you meet household expenses and continue repayments despite reduced income. A hardship letter could be written if you are unable to make payment. Perhaps you have experienced a job loss or a medical emergency that has drained you in a way that you’re unable to make debt payments.
A hardship letter can also be written to request forgiveness of debt. If your financial circumstances are in such a way that you are unable to repay and perhaps you don’t see an ability to repay in the foreseeable future. You can request for forgiveness of debt. You could also attach a letter from a doctor, a counselor or a case worker to support your reasons.
What you need to know when writing a hardship letter
To increase your chances of getting a favorable verdict it’s important to explain your reasons clearly for effective communication. Start by visiting a creditor communication list and understand what is needed in your province. Be clear on the remedy that you’re seeking and don’t promise more than you can reasonably afford. Prepare a list of all your current income sources. List your weekly and monthly expenses capturing all your spending, and an estimate of seasonal expenses.
Take stock of your assets and what could be considered collateral if you default. Take note of the co-signed, jointed and guaranteed debts because the other person will be required to pay for the debt for you. Put together your supporting information alongside a brief summary of all expenses. Once you have written to the creditors with supporting information attached, ensure that creditors receive it. Ensure you have proof that they received it. This means you need to be very certain of the creditor’s mailing address. Follow through on the commitments you make in the letter.
Sample letter to creditors for hardship
We are going to explore two sample letters to creditors for hardship. One sample letter will demonstrate how to write a hardship letter when you want reduced payments and the other for when you’re unable to make payments and would like debt forgiveness.
Sample 1
Corien Bertha
Lindsway St. No.68
New York
DD/MM/YYYY
Medley Home Loans
123 Green Lane
New York
Subject: Hardship Letter
Your reference: LL/C.B/Hardship
Account name: C.B. Heather
Account number: 9875463
Dear Sir or Madam:
I am writing to seek help concerning the mortgage I hold with your firm. I recently got laid off from my job at the close of the year. Please see the attached retrenchment letter. Currently, I am relying on freelancing jobs to maintain the family.
I am afraid that the reduced and unstable income is not able to support family bills and allow me to keep up with mortgage repayments as I did earlier. I am reaching out to creditors to request that they accept lesser repayment amounts for all my loans. I would request Medley Home Loans to allow us to revise our repayments to $1,000 from $3,500 monthly. This is the maximum I can pay given my present circumstances and my level of debt and expenses.
I have provided my financial statement for your attention. From the statement you will see that this is the most I can offer. In spite of the hardships, we are still keen on keeping our home. We hope for your understanding as we navigate these challenges.
I believe that this is a temporary situation as I’m actively looking for another job, but I don’t expect this to change, at least in the coming year. I will communicate and adjust payment as our situation improves. I will communicate this promptly to you in writing.
We sincerely hope that you will consider our request and we’ll have a mutual agreement that will benefit both the company and my family.
Yours Sincerely,
Corien Bertha.
Sample 2: Hardship letter requesting debt forgiveness
Corien Bertha
Lindsway St. No.68
Atlanta
DD/MM/YYYY
First Bank
123 Purple Lane
Atlanta
Subject: Hardship Letter
Your reference: LL/C.B/Hardship
Account name: C.B. Heather
Account number: 1786354
Dear Sir or Madam:
On June 7, 2017, I was involved in an accident that left my husband permanently decapacitated and I nursing a serious spinal injury. As a result, we spent a huge amount of our savings and insurance trying to recover from the injuries while being unable to continue working. This also explains why we have defaulted on our loan repayment for the past months.
I am writing to request a consideration to forgive our outstanding loan amount. We have tried by all means possible to continue repaying our loan but it seems completely impossible to follow through with payments. All the benefits from insurance and pension plans have been applied to healthcare and we don’t have any residual resources to commit to debt repayment. We understand that it’s our full obligation to repay the loan but we have completely run out of options.
We have provided our bankruptcy report, financial statements from the last two years, invoices and receipts from the hospital, bank statements and communication from former employers for your review. Our situation isn’t temporary and don’t have an avenue for reprieve. Therefore, we request your forgiveness of the debt.
Thank you for being considerate with us in the past few months.
We hope you’ll consider our plea and look forward to a favorable consideration.
Yours Sincerely,
Corien Bertha.
We hope these samples will be of help to you as you consider making your case. Customize them to suit your plea and be as succinct as possible. Remember to indicate an alternative plan in the letter and ensure to follow through with it, if applicable.