financial help

Need Emergency Financial Help? 7 Tips to Deal with a Financial Crisis

Have you endured financial problems? Well, sorry to say, if you haven’t yet then you will. 4 out of 5 Americans will face financial hardship.

Why are financial problems so common? Many different factors point to this.

Unemployment, minimum wage and other underpaid positions force Americans to not afford saving or budgeting. This is why many Americans live in the poverty line and are forced to accept welfare and food stamps.

Financial problems can easily cause feelings of stress and even depression. But you always have options. If you need financial help, use these 8 tips to get you back on your feet.

1. Don’t Overspend During Times of Financial Crisis

Many Americans can’t keep a budget. While not making enough money is one of them, another culprit is not knowing when to stop spending.

In 2017, Americans racked up $92.2 billion worth in credit card debt! And it’s not surprising why. We live in a society where stores, restaurants, and other specialty goods are shoved in our faces.

If you’re in a financial crisis, cut back on your spending. Make your money only go toward necessities, such as bills and groceries. Use any extra money toward your savings.

2. Find a Pattern

Is this your first financial crisis? Or are you one of those people who can’t afford anything?

If you’re in the latter, there’s probably a pattern you’re digging yourself into.

If you’re in severe credit card debt, look at how much you’re making versus how much you need to spend. If you don’t spoil yourself with consumer goods and can’t afford basic bills, you’re not making enough money.

Do you always find yourself in the hospital and you get a hefty medical bill? Try switching health insurance or opt to visit a cheaper clinic instead of the ER.

When you identify the source of your financial hardships, you can find a solution.

3. Take Baby Steps

Unfortunately, you can’t wish your financial troubles away. Coming to an immediate solution may not always be easy, especially if you’re thousands in debt.

But you won’t suffer from financial stress forever. Rather than think of the big picture, take baby steps to improve your financial situation.

A good example is finding a way to increase your income. See if you can find a new job, ask for a raise, or get a second job.

4. Keep Tabs on Your Bank Account

Have you heard the song “I’m Too Scared to Check My Bank Account?” This is a song many people can relate to. But you need to face the dragon and check your bank account daily.

This is a great idea for two reasons. Checking your bank account will help you keep better tabs on your money during this financial hardship. You’ll also gain a better knowledge of budgeting and prevent overspending.

For example, if you have $2,000 in your account but need $1,400 toward your rent by next week, you’ll only have $600.

This may seem like a lot, but you’ll need to use that money toward your crisis, want to use put some of that in your savings and use that money toward groceries and gas for the week.

Thinking this way, this prevents you from going out with friends or buying expensive smoothies every day.

5. Write Things Down

Writing is more powerful than we can imagine. When we have financial stress stuck in our head, it makes us feel negative. When we put it in words and write it on paper, those stresses escape our mind and they have an outlet.

Start keeping a daily finance journal. You should start by writing your plan to overcome your financial crisis.

You can keep a spending log of how much you’re spending each day to track your spending. Or, you can just write about how financially stressed you are.

Writing will help take some of the stress away and will help you look at your problems in a logical manner.

6. Reduce Your Expenses

You may love your car and your iPhone, but you have other important expenses to attend to. When you’re stuck in a time of financial hardship, do what you can to reduce your expenses.

Find anything you can sell. This can include a gaming console, jewelry, or anything else you can get a couple hundred of dollars for.

Then, take a look at your monthly expenses. Trade in your smartphone for a cheaper phone and cell phone plan. Then, sell your car or trade your hot sports car in for a cheaper car. See if you can downgrade your apartment.

Reducing these expenses will keep extra money aside so you can better handle your financial crisis.

7. Save, Save, Save!

Are you doing great at budgeting and limiting your expenses? If so, it’s tempting to put all of that money toward your financial crisis.

But hold on! What if you endure another financial crisis again? You won’t have any money before you spent the extra money you had.

Instead, put a percentage of your earnings toward your savings.

In a perfect world, you should save 20% of your income. That means if your yearly salary is $40,000 then you should have $8,000 in your savings account.

In other words, you need to save almost $170 out of your paycheck every week – and you likely can’t afford that if you’re in a financial crisis.

In this case, save something. If you can only save $10 each paycheck, you’ll still have $40 or even $50 extra at the end of the month. This is enough for several nights worth of dinner.

As long as you save a tiny bit of money, you’ll still be better off than if you never saved at all.

Do You Still Need Financial Help?

If you’re in financial help, consider writing a hardship letter. This explains why you’re in financial distress and what you can do to resolve it.

For more help, take a look at our hardship letter examples.

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6 Common Mistakes People Make in Financial Hardship Letters

Almost one-third of Americans are struggling financially to get by.

Even after the 2008 recession, Americans still find it difficult to afford their living expenses and basic needs. Almost half of Americans struggle to find the funds to pay an emergency $400 expense. Leaving these folks to either use a credit card, borrow money from others, or simply not pay.

If you’ve found yourself in this position, then you certainly aren’t alone. In a situation where a financial hardship arises, you may need to ask for a loan modification to lower your monthly payments. A financial hardship letter can grant you some leniency and much-needed relief.

We all know that circumstances out of our control can arise and take a toll. Knowing how to properly write a hardship letter can help you to create space to get back on your feet again. A financial hardship letter for mortgage payments, educational loans, or rent payments may be vital in maintaining your peace of mind during this difficult time.

As beneficial as it is, it’s important to know how to write a hardship letter properly. Read on to learn the mistakes to avoid when writing a financial hardship letter.

How to Write a Hardship Letter: 6 Mistakes to Avoid

1. Writing Too Much

Financial hardship letters should be concise and to the point. Stick to briefly describing the cause of the hardship, actions you’ve taken to amend the situation, and why the hardship will not improve for a period of time.

Aim to stick to around 500 words or less. Depending on the complexity and actions you’ve taken you may need to write more, but always aim to stick to the facts and leave out unnecessary comments or information.

Financial departments are sometimes overrun with financial hardship letters, so it’s best to keep it short to avoid misinterpretations. By keeping your letter short and to the point your lender gets the facts without needing to clarify information. If the information is unclear or misinterpreted then your request could be denied or delayed.

2. Referencing Irresponsible Activites

Your lender needs to know that the financial hardship arose of circumstances out of your control. If you lost your money because of a gambling, drug use, or because of trouble with the law your lender will not be sympathetic. Lenders want to see that even though you attempted to be responsible with your money, a situation or life circumstance occurred that caused financial hardship.

Causes that a lender would be understanding of include a death in the family, a job loss, an illness, or disability. Consult with your lender to see what they qualify as a financial hardship to see if your situation is applicable.

3. Leaving Out Financial Information

Most lenders require that you fill out an application for financial hardship as well as submitting a hardship letter. The application will inquire what your debts are and what you currently make. Your lender will have access to any recent purchases that require a loan such as purchasing a car by pulling your credit report.

If your financial hardship was caused because of purchasing something unnecessary or considered a luxury, then you may not qualify for financial hardship. For example, if you recently purchased a boat and the boat is for recreational use only then your lender will likely not be sympathetic.

Instead, your lender may suggest that you speak with a financial advisor who can educate you about budgeting and making purchases within your means. While this may be frustrating to hear and deal with, it may help you in the long run.

Make sure to include all recent debts to avoid being immediately denied because of leaving out financial information.

If the purchase you made was because of a basic need such as transportation or housing include these debts in your application. Explain the circumstances for needing this expense in your financial hardship letter.

Your lender still may not approve your loan modification request, but if you include all of the necessary financial information you can know that your application was thoroughly assessed. Reference your lender policies to see if your recent debt may forfeit your financial hardship loan modification request.

4. Other Sources of Help

Telling your lender that there’s an option of getting the money from another source of help could ruin your chances of getting qualified. For example, if you say you could borrow $10,000 from your parents, then your lender may consider this as an option for paying your loan instead of granting financial hardship.

Don’t mention hypothetical situations where you could get money from. Stick to the actions you’ve taken to repair the situation and why it’s not improving. Leave out any statement that could be misinterpreted or is truly not an option to rectify your financial situation.

5. Not Stating a Plan of Action

Lenders want to see how you plan on fixing your financial situation based on your current circumstances. They want to know that in the future you will again be able to pay the whole amount. Include in your hardship letter how your current situation will be worked out and how long this may take.

For example, if you recently lost your job and are temporarily unable to pay your mortgage then explain how you intend on paying the full amount as soon as you get another job. The lender wants to see how a loan modification will help you now so you won’t go into default or foreclosure later on.

6. Not Including a Proper Sign-Off

A proper sign-off for a hardship letter should express gratitude to your lender for considering a loan modification. You and your lender are working as a team, but your lender is not required to grant your request. Showing your appreciation can go a long way.

Always sign and date when you sign-off on your hardship letter. If your hardship letter applies to a residence include the address below your signature and date. This lets the lender know which residence you are referencing within your hardship letter.

Feeling More Confident About How to Write a Hardship Letter?

Continue building your confidence by exploring more information about writing hardship letters. To learn more about writing hardship letters, visit our blog.

financial hardship

What Is a Financial Hardship Letter, Exactly? Here’s a Quick Explainer

Over 3/4 of Americans are currently in some sort of debt.

Whether it be from past student or business loans, credit card debt, or a mortgage on your home?

The unfortunate truth is that the percentage of Americans who currently can’t afford their homes due to debt or other financial problems has risen by close to 150% in recent years.

If you’re among these people, writing an effective financial hardship letter may be able to help you to keep your home. But what are some common hardship examples, and what elements should a strong letter of hardship include?

In this post, we’ll tell you everything that you need to know when it comes to how to write a hardship letter.

What Is a Financial Hardship Letter?

Before we get into the specifics of writing an effective financial hardship letter?

Let’s first discuss what exactly one is.

A hardship letter is a document that you will write to your lender when you need to apply for some sort of modification to your mortgage or your loan. You will need to write one as a sort of “explanation” as to why you can no longer make the standard repayment amount, or why you have missed payments.

Your letter needs to make it clear to a lender that you want to be able to make your payments on time and in the full amount. It’s just that, because of unexpected circumstances, you are currently unable to do so.

In other words: a financial hardship letter isn’t a “get out of jail free” card that will allow you to behave irresponsibly or “buy you time” when it comes to repaying your debts.

It is a proactive way to show your lender that you take your debts seriously and that you want to work with them to find a way to modify your repayment plan in a way that’s achievable for you but still beneficial to them.

You will also need to tell your lender the steps that you are willing and able to take in order to get your financial situation back on track. You’ll also need to give them a rough estimate of how much time that you believe this will take.

A well-written financial hardship letter can help you to avoid having to foreclose on your home or prevent you from making a short sale.

Of course, not everything qualifies as a financial hardship. Read on to learn more.

Common Financial Hardship Examples

Just because you went on a spending spree at the mall or because you would rather spend the money on something else other than repaying your debts, does not mean that you’re experiencing a financial hardship.

Situations like that only tell lenders that you’ve made poor financial decisions — so don’t expect too much sympathy from lenders if that’s the case.

However, there are hardship examples that are legitimate and can cause you just as much emotional pain and stress as they can financial problems.

So, before you draft that letter, let’s talk about common financial hardship examples.

These can include incarceration, a sudden loss of your job, or an unexpected reduction in your income. Maybe you’ve had to take a pay cut, or perhaps your partner has been injured, ill, or unable to work because of other medical issues.

Perhaps the terms of your mortgage have changed. Perhaps you’ve recently dealt with a natural disaster, or maybe you’ve even gotten a divorce. In some cases, you may even face financial hardship due to a death in the family.

Remember that, unfortunately, a reduction in the expected value of your property does not qualify as a financial hardship.

How to Write a Hardship Letter Effectively

Now, let’s take a closer look at how best to write a hardship letter that will give you the results you want.

The first thing you’ll need to do is to calculate your loan amount and figure out exactly the kind of modification you want to request. Getting specific with the numbers makes your letter much more likely to be taken seriously.

Your letter should also include your name and address, the financial institution you’re working with as your lender, and your loan/bank account number.

Begin quickly, as these letters truly shouldn’t be longer than one page. Explain your specific hardship as neutrally and succinctly as possible.

In other words, this isn’t the time to trash your ex-employer or your ex-spouse for causing you financial problems. Then, explain what a modification to your loan would allow you to be able to do.

How would it help you to improve your financial situation, and what steps will you personally take to do so? Then, it’s time to move into the specific numbers when requesting a loan modification.

Then, close by explaining to your lender how you plan to prevent yourself from getting into this situation again in the future.

Need Additional Help With Your Financial Hardship Letter?

We hope that this post has helped you to understand not only the situations that may make it necessary for you to write a financial hardship letter but also how to craft one effectively.

We understand that, when you’ve fallen on hard financial times, it can sometimes feel impossible to get things back under control again.

Getting approved for a repayment plan can make things much easier.

Looking for additional advice on how to write a hardship letter for a specific situation?

Whether you need a good template for a letter due to property damage, a job loss, medical bills, or more, we have the information that you need to include in your letter.

Let us help you to keep your head above water when you need it the most.

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The 7 Elements of a Persuasive Hardship Letter

Every day, American’s fall further and further behind financially. You’re doing the best you can, but suffering through a financial hardship really takes a toll.

On top of that stress, you’ve now been told that you need to write a financial hardship letter to get the help you need. It’s probably something you’ve never had to do, until now.

So, what is a financial hardship letter and how do you write one?

Well, it’s a letter that explains in detail the hardship you are experiencing. It helps people understand your difficult situation and how they can best help you. That’s why you need to make it very persuasive.

Here are the most important elements you should include in your hardship letter.

7 Elements of a Persuasive Hardship Letter

1. Make it Personal

This isn’t a business letter. You want the person reading it to identify you as a person, a human being in need. Write your financial hardship letter in your own words, using conversational language.

Be sure to keep it polite. You’re asking for help, after all.

2. Use Dates

You’re going to tell a story in this letter. Use dates to help explain how long it took to get in your current situation.

Make an outline using dates of significant events. Close estimates using month and year are fine. You may need to look back at old statements and documents to figure it out.

Using dates helps keep your story of events in logical order. It also helps the reader understand how long you’ve been trying to fix the problem on your own.

3. Include Specifics

Hardship letters need good examples. You want to include specific things that have happened to put you in this situation. Be direct. Do not exaggerate.

Give examples of the tough things you’ve endured. If you’ve lost your job, say so. Did you become a single parent? Tell the reader how that happened.

Include specific financial data. Numbers tell a financial story that your reader will understand. Here are some examples of financial information that may be persuasive:

  • Mortgage balances, rates, and terms

  • Specific credit card balances and rates

  • Your budget shortfall

  • Tuition, fees and other amounts related to schooling

  • Childcare and other expenses related to raising a family

  • Care and financial support you provide for an aging parent
  • Medical bill balances and prescription fees

The more information you give, the better your reader can understand what you are going through.

4. List Everything You’ve Done to Help Yourself

Most people want to help someone who also helps themselves. Show how you’ve taken responsibility for your situation. Your reader will be more empathetic if they can see you’ve done your best.

Here are a few examples of things that may help:

  • Tried to find employment or a second job

  • Borrowed money from family or friends

  • Built a budget

  • Sent partial payments

  • Worked overtime

List examples that show how you hard you are working on it. This can go a long way in persuading someone in your favor.

5. Explain that You are Trying to Avoid Bankruptcy

The mere mention of filing bankruptcy changes the situation. In a bankruptcy, all credit, collections, and foreclosures are frozen. No bank wants this to happen.

Banks and creditors have a lot more to lose when someone files bankruptcy, so they work much harder to avoid it. In many cases, they will offer new options to help you avoid filing bankruptcy.

Don’t threaten with a bankruptcy. Explain how you are trying to avoid one.

Bankruptcy is the last thing that most people consider. You only do this after all other options have been exhausted. Mention in your letter that, if things continue on this current path, a bankruptcy may be your only option.

Reassure your reader that it’s not the outcome you want. You are trying to avoid bankruptcy, after all. You just need a little help.

6. Ask For What You Need

This is where you ask for help. Explain what you need from this organization. Be as specific as you can.

Make sure you have done your research and have a plan of action. Understand exactly what the organization has to offer and if it will help stabilize your finances. You don’t want to be back in this situation 6 months from now.

  • If you are looking for a loan modification, list out specifically what you are looking for. Want a rate reduction or a change in the loan terms? Say so.

  • Looking for a grace period? Detail the time frame you need. Be specific.

  • Need financial assistance? Ask for the exact amount you need. If you ask for too little, you won’t be in a better place in the long run.

The more specific you can be, the better. Offers that won’t help you, in the long run, are useless. Ask for exactly what you need.

7. Explain How it Will Help

Your hardship letter should explain how your request will help your situation.

The goal is to stabilize your finances. Tell the reader how this will happen if they grant your request:

  • Are you trying to keep your home or sell it in a short sale? Explain how this will help your family live better.

  • Maybe your goal is to consolidate debt. Explain how a single, lower payment would help you pay your bills each month.

  • Trying to get financial assistance? Explain what you will do with the money to help stabilize your finances.

  • Proposing a debt settlement? Show how you will be able to get back on track if you can reduce the amount you owe.

Whatever the request, be sure that you let the organization know how it will help you become stable.

It’s Time to Write

Now that you know how to write hardship letters, it’s time to sit down and do it. Don’t put it off because it’s difficult. Get your hardship letter done and get the help you need.

Looking for more help with writing hardship letters? Check out our samples and advice!

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The Ultimate Guide on Writing an Effective Hardship Letter

Are you having an incredibly tough time keeping up with your mortgage payments?

You have the right to contact your mortgage lender and ask them if they’d be willing to modify your loan terms or give you the ability to take part in a short sale.

But before they allow you to do anything, you’ll need to write a hardship letter to your lender and let them know why you think you deserve a loan modification or short sale. Your letter will serve as your opportunity to bring your lender up to speed as far as your financial well-being is concerned.

Writing an effective hardship letter might sound easy. But it’s a little more complicated than you might think. Here’s a guide for writing an effective hardship letter.

Keep Your Hardship Letter as Concise as It Can Be

It’s easy for people to get really carried away when they’re writing a hardship letter. They think they need to list every single bad thing that’s happened to them over the course of the last year to get a lender to believe just how bad things are.

You might be tempted to take this approach when putting together your letter. But rather than going that route, keep your letter concise. Don’t make it any longer than one page.

A lender won’t have all day to sit around and read your entire story. So instead, include the essential details and make every word in your letter count. It’ll improve the chances of your lender actually reading through your whole letter and taking you seriously.

Be Specific With the Request You’re Making to Your Lender

At the beginning of your hardship letter, you should clearly state the request that you’re making of your lender. There shouldn’t be any confusion as far as what you want your lender to do for you.

You might begin by saying something as simple as, “I wish to restructure the terms of my mortgage and get access to a lower interest rate immediately.” This will allow your lender to see exactly what you hope to get out of your letter.

Does that mean they’re going to give it to you? Absolutely not. But it does mean they’ll have a crystal clear idea of what you’re hoping to achieve with your letter.

Explain Your Financial Hardship in Great Detail

Once you’ve gotten your lender’s attention by making a clear request to them, it’ll be time to lay out the financial hardship you’ve experienced. You should be as forthright as possible with this part of the letter.

There are so many reasons why people experience money problems. Some of these reasons include:

  • Unemployment or the sudden loss of income
  • Medical expenses
  • The death of an immediate family member
  • A divorce or separation
  • Military service
  • Unexpected home repairs
  • Incarceration

Pick your reason and tell your lender all about it in one or two paragraphs. Feel free to share all the gory details surrounding your financial struggles.

For example, if you’re $250,000 in the hole because of a medical issue that put your husband in the hospital for three weeks, say that. If the breadwinner in your family passed away and reduced your income significantly, say that.

Your lender should feel your pain and know exactly why you’ve fallen behind on mortgage payments after reading this part of the letter. Make a strong case for yourself without going on for too long.

Let Your Lender Know Your Financial Situation Is Not Going to Change

After you’ve written about why your financial situation is so dire, emphasize the fact that your situation is not going to change.

Many lenders will refuse to adjust the terms of a loan or shut down the idea of a short sale if you’re the slightest bit hopeful about your financial future. If there’s a chance you might get your finances back on track in a month or two, they won’t want to let you out of your current mortgage agreement.

Let your lender know why you’re going to be stuck in a financial bind for the foreseeable future. They’ll be more likely to acquiesce to your request if they think there’s a chance you’re going to fall into an even worse situation eventually.

State Your Request for a Second Time Near the End of Your Letter

When it comes time to close your hardship letter, restate your request from the beginning for a second time just to drive home your point.

Then, thank your lender for taking the time to hear your hardships and carefully consider them. Mention that you’re looking forward to their response and that you want to continue to work with them to make things right.

Revise Your Letter to Make Sure It’s Effective

Before you send your hardship letter to your lender, revise it several times to see if there are any places you can improve. Take out any words that might be difficult for someone to understand and tighten it up so that it’s to the point.

If possible, ask someone you trust to take a look at the letter for you and make recommendations. If you’re currently working with a lawyer, they might be willing to check out your letter and tell you what you could do to make it stronger.

From there, mail your letter off to your lender and hope for the best. You should receive a response from them soon letting you know if they’re willing to honor the request you have made.

Start Putting Together an Effective Hardship Letter Today

Going through a financial hardship isn’t fun at all. But you can get some relief from it if you’re able to write a compelling hardship letter.

You can write hardship letters to mortgage lenders as well as any other lenders that you work with. If you’re convincing enough in your letter, you might just be able to get the help you’re looking for from them.

Check out our blog to learn more tips for putting together effective hardship letters.