Debt Hardship Letters

Writing A Debt Hardship Letter

There are a lot of reasons why you may not be able to meet your financial obligations. If this happens to you, you shouldn’t hide that fact but rather try to address it by being honest with your creditors. They will actually appreciate this and will usually be happy to work with you, as taking out legal action against you would be far more expensive. However, you should not do any of this over the telephone, as you should have documented proof of your efforts.

Explore the Various Ways to Deal with Your Debt

If you are experiencing difficulties in repaying your debt, there are different ways to deal with this. You could, for instance, offer a one-time lump sum to pay off the debt. Alternatively, you could ask that you be allowed not to make any payments for a specific period of time. You can even ask for the debt to be completely forgiven.

When you write a debt hardship letter, you essentially ask the creditor to consider the debt to be repaid, based on specific conditions. To be considered for this, you must prove that you are in significant financial hardship. For instance, you may have had an unwanted reduction in hours, a death in the family, or an illness.

You should never think that you are somehow deserving of a settlement, however. That is a decision that your creditor will make. Rather, you are writing in an effort to convince the creditor to accept your offer. You must write in such a way that you don’t exaggerate your hardship, as this could mean the creditor will request a bankruptcy, but don’t underplay it either, as this would lead to the creditor not agreeing to providing you with a settlement.

Key Tips in Writing a Debt Hardship Letter

First of all, make sure that you include the reason why you are unable make the payment and how you are already trying to remedy your situation. You should explain your current situation and what are your assets. Lastly, you must explain your offer. To do that properly:

  1. Keep your letter as short as possible. If possible, it should be just one page in length.
  2. Provide all relevant information on financial income.
  3. Be polite and courteous.
  4. Provide any personal information of importance, including medical conditions.

If you hope for settlement, you have to give a clear offer. In old debts, any offer is usually accepted, but don’t assume that this will happen. Always request a written confirmation of receipt and that of any decisions that have been made.

If you are in a position where you cannot repay your debt, you can ask for it to be forgiven as well. In most cases, this will only be accepted if there is no way for the creditor to collect in other ways. For instance, if someone is in receipt of Social Security benefits, it is not possible to enact an income garnishment.

Make sure that you end your letter with a full and honest apology for the situation that you have found yourself in. However, do not become emotive. The creditor is looking for facts, not for feelings.

Debt Hardship Letter Example

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