How to Create a Hardship Letter
One-million homeowners lost their homes through foreclosure in 2010. The forecast for 2011 is even worse, with lenders set to repossess an anticipated 1.2-million homes. If you risk becoming part of that statistic -- or if you are strapped with high credit card or medical debt -- creating a hardship letter is a smart move. Let your lender know what caused your current difficulty. Ask to work with him to resolve the problem.
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Instructions
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Keep the letter short, preferably just one page. Each section must be clear and concise.
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Begin your letter by giving your name, address, loan number and the approximate date your financial problems started. Write this information in memo format at the top of the page, or in the first paragraph of the letter.
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Describe the event that caused you to fall behind in payments. Lenders are more sympathetic to unavoidable problems, such as a job loss, a serious illness, unexpected medical bills or a death in the family. Having a high amount of debt due to indiscriminate spending is not considered a hardship.
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Avoid going into a lengthy history of your situation, but do try and personalize your account. Keep the focus on your willingness to work out a solution.
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Be specific about the resolution you are requesting. Don't ask for the debt to be forgiven. It's still your responsibility to pay. Use your hardship letter to request a renegotiated contract with a lower monthly payment you can afford.
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Include copies of any documents that support your case. These include bank statements, income tax statements and bills or letters sent to other creditors.
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Ask the lender to review your situation to determine if you qualify for a renegotiated loan. Thank the reader for considering your request.
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Sign and date your letter. Any cosigners on the original loan must also sign the hardship letter.
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Tips & Warnings
Show respect. The tone of your letter is very important. Don't fall into blaming or self-pity, but rather focus on your determination to work out your financial problems.
References
- Photo Credit Bankrupt. Businessman with empty pockets (with clipping paths) . image by Vitaliy Pakhnyushchyy from Fotolia.com
