How to Write a Hardship Letter – The Ultimate Guide

Despite your best efforts, you might face obstacles that prevent you from fulfilling financial obligations and other promises. Suffering from an injury, losing a key source of income, or making an emergency payment can throw a wrench in your carefully thought-out budget.

If struggling to resolve outstanding debts, consider writing a hardship letter. These letters explain financial situations to credit card issuers, banks, or lenders and propose some way they can help you resume regular loan repayment.

Hardship letters can be a crucial part of your debt resolution. If you have bills to pay or need a payment plan to catch up, a letter may be the right nudge you need to convince the lenders to work with you.

What Does Hardship Mean?

A financial hardship occurs when a person cannot make payments toward their debt.

Financial hardship letters are the best way to explain why your account is behind. Lenders may use them to determine whether or not to offer relief through reduced, deferred, or suspended payments.

Hardship Examples

There are a variety of situations that may qualify as a hardship. Some reasons might be purely financial while others may center around major life events. The most common examples of hardship include:

  • Illness or injury
  • Change of employment status
  • Loss of income
  • Natural disasters
  • Divorce
  • Death
  • Military deployment

No matter what your reason is, it is important to be open and honest with your lenders. Show that you are willing to find a solution together with a reasonable request and a commitment to repay what you owe.

What Is the Purpose of a Hardship Letter?

Before you begin drafting, you need to decide on the goal of the letter. What are you going to ask for specifically? There are several requests you can make from your creditor, collections agency, or mortgage lender, including:

  • Suspending past due amounts
  • Bringing your account current
  • Adjusting your interest rate
  • Lowering your minimum payments
  • Modifying your loan
  • Agreeing to a short sale of a home
  • Considering a settlement option

If you’re not sure about your options, you can always work with a personal financial coach who can help you explore your options. Our credit coaches are experienced in writing letters to creditors for multiple types of hardships, including life events, credit card, and debt.

Tips for Writing a Hardship Letter

1. Keep it original

The purpose of a hardship letter is to convey a sense of sincerity, honesty, and commitment to your lender. Directly copying a letter found online may not convey the right amount of integrity your lender is looking for.

Find a hardship letter template to use as a baseline for your own letter. Be sure to include information that is unique to your situation.

2. Be honest

If you say anything in the letter that seems false or is obviously untrue, be prepared to get rejected. Include current and accurate documentation to support any claims you make in the letter. You should also be prepared to dive into your situation at a greater length in person or on the phone.

3. Keep it concise

Although it’s tempting to give a full backstory, it’s important to be as brief and straightforward in the letter as possible. Do not go into unnecessary details and try to keep your letter to one page. Creditors are busy, and handing them a novel does not show that you are respectful of their time.

4. Don’t cast blame or shirk responsibility

Hardship letters are designed to explain circumstances, not point fingers. No matter how unfair your situation might be, an effort to deflect blame or scapegoat in your hardship letter will be a red flag for the lender.

Instead, focus on describing the exact predicament, your response to the situation and why you need the creditor’s help to succeed.

5. Don’t use jargon or fancy words

A great way to keep your letter short and direct is by using simple language. Aim to write your letter at a sixth-grade level and don’t go overboard trying to impress the reader. Don’t forget to re-read your letter aloud for smoothness and clarity.

6. Keep your objectives in mind

Remember to focus on the reasons you are writing this hardship letter. You’re in a tricky situation, you need help and you want to convince the creditor to help you. You must make it clear that you will only succeed with their help.

7. Provide the creditor an action plan

Telling the creditor exactly what you want from them makes it easier to help you.  You’ve already done the hard work of coming up with a solution – now all they have to do is say yes.

Be specific with your direction and tell the creditor exactly what you want them to do. This could mean a simple “Contact me at your earliest convenience” to further discuss your options or asking them, “Please place my monthly payments on hold for the next 3 months.”

Whatever action you ask them to take, you need to make it clear to them that this action is necessary for you to save the loan.

8. Talk to a Financial Couch

A financial coach can help you explore all of your options and ask for the right kind of help. They can also review your letter before you send it to make sure you’ve communicated effectively and haven’t made any serious errors.

The writing process and content of a hardship letter can be personal, but our trained, professional coaches are committed to protecting your personal information.

Specific Steps for Writing a Hardship Letter:

Every hardship letter should be personalized, original and direct. However, there are several different ways to format or plan the letter’s contents. Here is a quick breakdown of a common four-paragraph outline that you can use to guide your own letter.

How to Describe Your Hardship

The first paragraph should focus on introducing yourself and your particular situation. This will be the section that explains exactly what your hardship is and establish your desire to work with the lender to continue paying off your debts.

Here’s an example for a medical hardship letter:

“I’m writing to you because I was unable to work for several months due to an injury. During this time, our emergency savings were exhausted and we fell behind on our debts. Now that I am healed from my injury and ready to return to work, I believe I could resume regular payments if you would make adjustments to our loan.”

This paragraph works because it is brief. With only four lines, it doesn’t drag on but clearly explains the situation without too many unnecessary details. It also mentions that the borrower would be ready to resume payments if given a modification.

Of course, not every situation will be resolved. For example, you might not have an injury that has fully healed. If your hardship was permanent, you’ll have to explain that your situation has changed, but still intend to resume making payments with the creditor’s help.

Here’s an example for a divorce hardship letter:

“Due to my recent divorce, my household has been reduced from two incomes to one. Because of this loss of income, I have fallen behind on my mortgage payments and sunk into credit card debt to stay afloat. I’m working with a debt coach to come up with a budget and a plan to repay my debts, which I think I can do with your help.”

Again, the focus is on explaining quickly what happened and why the borrower has fallen behind on your payments. It also mentioned that they believe they can resume making payments if the creditor agrees to work with them.

This paragraph is a great example of mentioning two types of adversities – a life event hardship and a mortgage hardship. If you have multiple hardships that contribute to your situation, you should list them all. Of course, try to avoid too many paragraphs and long, unbroken narratives.

Your Response to the Hardship

After you describe your hardship, it’s time to go into more detail about what you are doing to resolve the situation. The second paragraph will focus on what you have done or are currently doing to resolve your hardship and keep up with your obligations.

Be clear and honest when describing the steps you have taken so far. Ultimately, your actions alone will not be enough for you to resolve the situation, and the letter should support the idea that you need the creditor’s help. Avoid holding back and minimizing your situation.

For example:

“Since my divorce, I have worked hard to live under a restricted budget, but I have cut and reduced everything I can and still don’t have enough to meet all of my obligations. Now that my divorce is final, my income and expenses have stabilized. While I don’t have enough to make ends meet under my current budget, I believe a reduction in payments for the next six months from you will enable me to resume making regular payments going forward.”

Remember, the goal of the letter is to get some kind of help from your creditor. The letter has to establish that you need that help if you are going to succeed.

What is the Goal of the Hardship Letter?

Now that you’ve stated your hardship and discussed what you have done so far, you need to state more explicitly what you want from your creditor. This is the paragraph where you can directly ask what you expect the lender to do.

For example:

“I believe a reduced interest rate would allow me to afford to make my payments going forward. I’d like to discuss this with you as soon as possible so we can work together to find a solution.”

Short and to the point, this message tells the lender exactly what you expect, and what they should consider. By providing a solution that will solve both you and the lender’s problem, you can prove that you are willing to do the work you are proposing.

Enclosures

The last paragraph is your conclusion. This is your chance to sincerely thank the lender for their time and express your hopes of working with them in the future to solve your joint problem.

You’ll also want to include supporting documentation to back up everything you have said so far. Be sure to include copies of relevant bills, orders, letters, and any other paperwork to substantiate your hardship claims and mention their inclusion

For example:

I truly hope that you will consider working with me. I’ve enclosed copies of the accident report and medical records as documentation to my claims. Please reach back out at your earliest convenience so that I may begin to settle my outstanding loans.

A quick ending, signature, and date are all you need to wrap up your debt hardship letter. Remember to follow up once the letter has been sent by phone or in person.

Sample hardship letter:

Your Name
Your Address

Your Credit Card Issuer and/or Lending Institution

Loan/Account Number: #

Dear [Get the name of the person in your creditor’s loss mitigation department and address it to that person directly],

[Paragraph 1-explain your situation, including any bona fide financial hardships that have resulted in your current delinquency.]

[Paragraph 2- discuss what you have done so far to correct your situation, and why you are unable to manage the situation on your own.]

[State what you want the creditor to do in order to help you succeed, and say why you think success will be guaranteed if you gain the creditor’s assistance.]

[Mention enclosures or attachments that you are including to corroborate everything you’ve said above. Sincerely thank the creditor for their consideration, and invite them to contact you by your preferred method.]

Your Name
Your Contact Info

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Speak to our certified Debt Coaches to review all of your options and discuss best strategies for getting out of debt.Speak to our certified Debt Coaches to review all of your options and discuss best strategies for getting out of debt.
Melinda Opperman

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over 19 years experience in the industry.