Writing A Hardship Letter Collection Agency

People do not really get into a situation where they have unmanageable debt intentionally. However, these things do happen, which can lead to their debt being taken over by a collection agency. If you find that you are still unable to pay your debt, you may need to write a hardship letter. The reason why this should be done in writing rather than over the phone, is because this will give you proof of your intent to resolve the situation. It also means that the collection agency cannot, at a later stage, change their mind.

There are several things that you can offer in a hardship letter collection agency. For instance, you may want to offer a one time payment, after which the remainder of the debt is written off. Alternatively, you could ask to have payments deferred. You may even ask for the bill to be forgiven completely.

Be Honest and Transparent in Your Hardship Letter

Whatever the reason is, you must be honest and transparent about it. After all, you are asking them to accept less money, or even no money at all. To achieve this, you have to explain what your hardship is, and what that means in terms of your finances. Examples of acceptable hardship include unexpected medical bills, sudden serious illness, involuntary reduction in income, loss of job, a failed business, job relocation, a death in the family, military duty, incarceration, divorce, or property damage.

Key Things to Include in the Letter

When you write your letter, you must remember that you are asking for a favor. The letter is designed to convince the creditor that you are deserving of that favor. To achieve this, you must indicate:

  1. The reason why you haven’t been able to pay your debt, and what you are doing to resolve this
  2. The status of your current finances, and what kind of assets you have (with value)
  3. Your offer for a settlement.

You may even try to have the debt fully forgiven. It is very rare for this to be allowed, unless it is clear that the creditor will not be able to collect the payment anyway. For instance, if you are in receipt of Social Security benefits, unemployment payments, or workers’ compensation, onto which income garnishments cannot be placed, they may be more likely to accept your proposal. Overall, it is better to make an offer for settlement, through a reduction in payment or a pause in payments.

Things to Remember

Make sure that your letter fits on a single page. It should include all pertinent financial information that makes it clear what your situation is. Always be polite and give a clear offer with full facts and details. Request a response to your letter in writing, so that you always have a paper trail of any agreement that is made.

Remember to always keep copies of any correspondence you have sent. Send your letters through signed for mail as well, so that you are guaranteed that it has been received. And do also follow up if you have not heard back after a week.

Hardship Letter Collection Agency Example

{Your Name}
{Your Address}
{Your Phone #}


To Whom It May Concern:

I have an outstanding debt to {Company} that I have been unable to meet. I would like to request a partial forgiveness of the account and a payment plan over the next {period of time}.

The reason I have been unable to settle this debt is {reason}. I have attached my financial records and payment stubs to verify my hardship. If possible, I was hoping that I could pay {percentage} percent in installments of {monetary amount} over the next {period of time}.

Please contact me at your earliest convenience so that we can work out an arrangement. Thank you for your time.


{Sender Name}

For more sample hardship letters, click here.

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

Writing An Eviction Hardship Letter Casual

If you are experiencing financial hardship, it is possible that you are unable to pay your rent. In an ideal situation, you will have written a hardship letter to your landlord long before you started to face eviction. However, there may be situations where that was not possible, and you are now in fear of that notice from your landlord. Meanwhile, if you rent from a private landlord, it is likely that you have some sort of personal, perhaps even amicable, relationship with him or her. Hence, you may be able to write a casual eviction hardship letter.

Basics of Writing the Casual Eviction Hardship Letter

Although you will be writing this letter in a less formal style, it does not mean that you can write it on a napkin and not pay attention to what you say. Rather, it means that you can put a little bit more feeling into what you want to write. Hence, it should still be written neatly, on proper paper, and in such a way that it isn’t filled with spelling and grammar errors. You might want to consider writing the letter by hand, rather than on a computer, but you then really have to be confident about your spelling.

What to Say in the Hardship Letter

In the letter, start by expressing your apology for being unable to pay your rent. If you are facing eviction, you must have had several arrears in your payments, which means you have not been a good tenant. You must own up to this in your letter. Explain that you know your landlord has already been generous and that he or she has shown a great deal of understanding but you are currently undergoing a certain situation (describe this). Make it very clear that you are genuinely thankful for being understanding and that you do not wish to take advantage of the landlord’s kindness.

Next, request your landlord not to push through with the eviction. Point out that you really understand how serious the situation is, and that you understand the position of the landlord in serving the eviction notice. Indicate when you expect to have the money for the rent or your proposed schedule for paying your arrears if you plan to pay in installments. Do also offer something else as a goodwill gesture. For instance, you may want to invest in a certain repair project yourself or landscape the garden at your expense.

If your financial situation is now under control, indicate that in your letter and that you plan to pay all future rents promptly. On the other hand, if your situation has not yet stabilized, explain what you are doing to remedy the situation and your proposed schedule for paying the balance. You must demonstrate that the rent payments are now a priority for you. For instance, you could provide evidence of setting up a standing order with your bank, so that the landlord can see that the rent will take precedence over any other bill that comes out of your account. End your letter by once again thanking the landlord for his or her kind consideration.

For more sample hardship letters, click here.

Eviction Hardship Letter Casual Example

{Your Name}
{Your Address}
{Your Phone #}


Dear {landlord}:

I am so incredibly sorry for being late with the rent again. I know that it was due on {date} and it is now {date}. You have been so generous and understanding in the past as I wrestled with {situation}, and I don’t want to take advantage of your kindness.

Please don’t proceed with the eviction. I definitely got the message when I saw your {letter/notice on the door}. I have the rent money and will {bring/mail} it to you immediately. Additionally, as a show of good faith, I hope you will allow me to {gesture such as upkeep of yard or repair projects}.

I promise you that I now have {situation} under control and will make prompt payment of the rent my top priority from here on out.


{Sender Name}

Writing A Hardship Letter Debt Settlement

Although the economic crisis is now officially behind us, many people continue to experience significant economic pressure. If you are facing a lot of debt, you may feel like bankruptcy is the only way out. However, before you file for this, you may want to consider writing a hardship letter debt settlement instead. Typically, this letter is sent for real estate debt, but it can actually be used for any kind of debt.

Avoid a Debt Management Agency If Possible

Experiencing serious financial difficulty is highly distressing and you may be feeling overwhelmed. It may be tempting, therefore, to contact a debt management agency to do the work for you. While these companies have their place in society, you should always consider doing the work yourself first. This is because these companies do not work for free, and all they really do is write on your behalf, collect your money, and distribute it among your creditors. These are things that you can do yourself with ease, so long as you write your letters properly.

Prepare the Relevant Documents

Your first step should be to get all your paperwork in order. Documents you will need include your loan documents, your pay stubs, and any other financial information that clearly demonstrates the difficulties you are in at present. If you do not have a job, you should provide evidence of any Social Security benefits you receive. Should you have been forced to reduce your contracted hours, you should have evidence of this. Do also make sure that you have evidence of all the payments that you did make, for instance, through your bank statements. This will set you in better standing with the creditor.

Write a Formal Letter

In terms of writing the letter itself, you must remember that it is a formal document. Hence, it should be properly addressed to the right person in the right department. You should include your account number in a visible way in the subject line. Additionally, your text should be clear and concise, highlighting precisely what your situation is and what you are proposing. Try to avoid becoming emotional in this, as the creditor is only interested in facts. Do also ask someone to proofread your letter, or reread it yourself the next day to ensure that it is free from grammatical and spelling mistakes.

Indicate Your Settlement Offer

Last but not least, the letter should include your settlement offer. If you want to settle your debt, you have to propose a figure that you feel is appropriate. In most cases, creditors prefer to make some sort of loan modification or adjustment, rather than agreeing to a settlement. However, there is nothing to stop you from trying, and the creditor is always welcome to make a counter offer. Do remember that you should be able to comply with the settlement that you offer should your creditor accept it. If you make promises that you can’t keep, you may find yourself in far greater financial difficulty later on. Be honest, be clear, and show that you are willing to come to a mutual understanding.

For more sample hardship letters and tips, click here.

Hardship Letter Debt Settlement Example

{Your Name}
{Your Address}
{Your Phone #}


To Whom It May Concern:

I am writing this letter to request that a payment plan be worked out concerning my debt to {Company}. Due to financial hardship, I cannot meet the current conditions that are required, but I hope that we can come to an agreement.

My current income is {amount} per month, while my debt is {amount}. The income-to-debt ratio is {amount}, which is impossible for me to pay off at this time. If you can forgive {amount}, I can make a monthly payment of {amount} over the next {period of time}.

I am willing to make a sincere effort to settle this account. I ask only that the litigations against me are dropped and that the account is stated as paid in full. Thank you for your consideration.


{Sender Name}

Writing A Hardship Letter Wage Garnishment

There are numerous avenues available to creditors to collect unpaid debt. One of those options if for them to apply for wage garnishment. This means that a percentage of your earnings is taken straight out of your salary and paid to the creditor. This percentage can be quite high, and it can cause significant hardship as well. If this is the case with you, then you may want to consider writing a hardship letter.

Basic Tips for Writing a Hardship Letter Wage Garnishment

This type of letter must be formal, which means it should be typed out, addressed to the right person, in the correct format, and free from spelling and grammatical errors. It should also, in the subject line, include an account number of the debt that is owed, if you have it.

State Your Request

Start your letter by explaining what you are requesting. This would be a cessation of the actions that are currently being taken in order to recover your debt. State that you are in the process of developing a payment plan, which you should attach to the letter. Explin that, while you understand that wage garnishment is an option for the creditor, it would be extremely detrimental not just to you, but also to members of your family.

Provide Details of Your Income and Expenditures

Before you write the letter, you should have prepared a statement of your income and all your expenditures. It should state how much of your income goes to necessary bills, and how much you have left. This statement should be included in your letter. You should also make it clear that you financially support other members of your family, and that the vast majority of your income goes to certain bills, leaving you with a certain amount each month for nonessential expenses. Thus, if a wage garnishment is applied, you would be left with virtually nothing towards the nonessential expenses, and that this could lead to you being declared bankrupt. Do not be afraid to state that bankruptcy would mean that your creditor will not receive any money at all. However, make sure that you don’t state this in a threatening way. After all, it is not their fault that you are in financial difficulties, and you are asking them to do you a favor.

Indicate Your Suggested Debt Repayment Plan

State in your letter that you are aware of the fact that you are not able to keep up with debt payments on your current income but you are doing something to increase it. Make a suggestion for a debt repayment plan and when you expect this to start. Indicate that you are looking forward to hearing back from them as soon as possible.

Make sure you include copies of every relevant document with your letter. Do also keep copies for yourself, and send the letter via registered mail. If you have not heard back from them within one week of your letter being received, make sure to follow up. It is your responsibility to take action if you want to avoid wage garnishment, after all.

Hardship Letter Wage Garnishment Example

{Your Name}
{Your Address}
{Your Phone #}


To Whom It May Concern:

I am writing this hardship letter to request a cessation to the actions being pursued by your company in regards to my debt. I am working to create a payment plan that we could agree on, but wage garnishment is extremely detrimental to my current family and financial situation.

I am including a worksheet of my income and how it is distributed to necessary bills. As you can see, I am the sole supporter of a {number} person family. Most of my paycheck goes toward {mortgage, rent, hospital bills, be specific}. This leaves me with {amount} leftover every month for nonessential expenses. If my wages are garnished then this will only further my difficulties and may lead to bankruptcy. If that were the case, I cannot imagine that I will ever be able to repay the charges.

I understand that the current disposable income amount that I have is not enough to keep up with my debt. Therefore I have also included a worksheet detailing a possible debt payment plan that might work for both of us. Please contact me as soon as possible so that we can work something out.

Thank you for your time and consideration.

{Sender Name}