How to Write Letters to Creditors

If you find yourself in a temporary---or permanent---financial crisis and are unable to make regularly scheduled payments to your creditors, it is important to contact them in writing to inform them of your financial situation. In some cases, a creditor may be willing to lower your monthly payment or allow you to skip a payment. Even if creditors are unsympathetic to your circumstances, you should memorialize all communications with them in case you end up in court over your debts.

Things You'll Need

• Original loan or transaction paperwork

Instructions

1. Locate all the original documents or paperwork regarding each loan or transaction. Reread the agreement to make sure you know where you stand with regard to default or late payments and what legal options your creditor may have if you miss a payment or default on the loan.

2. Evaluate your financial situation. Decide whether your financial crisis appears to be temporary or long-term. Be realistic, because asking for a temporary reprieve on your payments may not help if your situation does not improve in the very near future.

3. Determine to whom the letter should be addressed. In large corporations, payments are sent to a post office box, but a letter to discuss your payments may never reach a person at that address. Look at the contract or agreement you signed for a designated address to send correspondence. If the contract does not provide one, contact the creditor via telephone and ask for a mailing address for correspondence.

4. Draft the letter. Include at the beginning your name and account number or reference number. In the body of the letter, briefly explain your financial situation. Ask the creditor in very specific terms what you would like the creditor to agree to that will help resolve your situation. For example, if you believe allowing you to skip a payment will solve the problem, then ask for that. If your situation appears to be more extended, then ask the creditor to lower you monthly payments for a period of time. If you do not have a reasonable expectation of being able to pay the debt, then state that in the letter.

5. Sign the letter. Make and file a copy; send the original via certified mail.

References

• LegalHandle.com: How to Write a Hardship Letter

Resources

• Insolvency Helpline: Sample Letters to Creditors A
• Insolvency Helpline: Sample Letters to Creditors B
• Insolvency Helpline: Sample Letters to Creditors C