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.

student loan hardship

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.

hardship letter/hardship discharge

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!

hardship letter

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.

Writing A Financial Hardship Letter

There are many situations in which you may need to know how to write a financial hardship letter. Hardship, by its definition, is an unexpected event. People usually do not take on financial commitments if they expect not to be able to meet them. It is the reality of life that your situation may change and this can lead to a temporary difficulty that prevents you from complying with your financial obligations.

What Is a Financial Hardship Letter?

Very simply put, this is a letter written to a creditor, in which special consideration is requested because of a certain situation. This means that you are struggling with your finances due to a situation beyond your control. Most commonly, these letters request that outstanding debts be consolidated, or that some leniency be shown in relation to certain deadlines for payments and other similar terms and conditions. For instance, you may require leniency in regards to the payment of your medical bills, credit card bills, or even your mortgage payments.

It is also reasonably common for students to write a letter of financial hardship. They may not be able to afford the tuition for the course they plan to enroll in, and they have not yet been able to secure a scholarship or grant. In these cases, they may request for a reduced tuition. They may also write a letter of financial hardship as part of their request for a grant or scholarship.

Specifics in Writing a Financial Hardship Letter

There are various kinds of financial hardship letters, depending on the type of creditor. That said, they all follow a certain format and have to include a number of specific things.

  1. You should always be completely honest and straightforward about your personal situation. It is not possible for creditors to get money from you if you haven’t got it, so it is in their favor to negotiate with you so that they can recover as much as possible. However, they will only consider this if you are open and upfront.
  2. Do not write an emotional letter. This isn’t about how you feel or about the difficulties that you are experiencing. You do not want to give them a sob story, but you want to give them a picture of the facts and the reality. They want to hear what the situation is, what you are asking for, and how you aim to resolve the situation.
  3. Always discuss how you aim to solve the problem and your time table, and demonstrate that you will be paying and will continue to pay, as much as you can. Do not write a financial hardship letter as an effort to get out of paying your bills. Rather, it is about being realistic about your situation and how you aim to improve it.
  4. If there is some special consideration that you want the creditor to make, such as asking an educational institution for a reduced tuition, then try to discuss things other than the reasons why you can’t pay the normal price. Make sure that you also tell them why they should consider you as an ideal student, and someone that is worth making a significant exception to the rule for.

Financial Hardship Letter Example

{Your Name}
{Your Address}
{Your Phone Number}

{Financial Institution Name}
{Phone Number}
ATTN: {contact person}


RE: {consolidation/restructuring/forgiveness} of debt on {mortgage, credit card or other loan payment}

To Whom It May Concern:

I am writing because I am currently experiencing financial hardship, and would like to find a way to {reduce my monthly payments, avoid foreclosure, etc.}.

My problems began {date}, when{reasons for financial hardship, such as death, divorce, medical issues, etc.; be specific}. Since then, I have had {amount in dollars} per month, which has to go to {other areas where you need to send your money each month}.

I am not trying to avoid my responsibilities, and I am embarrassed that I am even in this position in the first place. To begin this process, I can offer the solution of {a certain amount per month, a short sale, a reduction of what you owe, etc.}, with the hopes that you will find this suitable. I know that we all want to avoid {foreclosure, repossession, collections agency, etc.}, so please contact me as soon as possible and we can discuss the options.


{Sender Name}

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 Insurance Cancellation Hardship Letter

There are a lot of reasons as to why you may want to cancel your insurance policy. Often, it is because of getting a better rate, or you simply do not need the insurance anymore. However, sometimes, it is because of financial hardship.

Handle the Situation Carefully to Avoid Miscommunication

It is very important that you handle this situation properly. If you don’t, then it is likely that there will be some miscommunication and you may find yourself having to pay various charges. It is important, therefore, that you also write your letter at the right time. Check your insurance policy so that you know which cancellation rules are in place. Make sure that you meet those requirements and find out what you should do next.

In most cases, you won’t be able to ask for a hardship cancellation over the telephone. Rather, you will have to contact the company in writing, meeting whichever cancellation policies they have in place. Often, they have a form that you have to complete, which you may also be able to find on their website. Either way, they do generally look for similar things.

Common Requirements by Insurance Companies

One of those things is a clear reason why you want to cancel your policy. In cases of hardship, you need to make sure that you indicate exactly what has happened that has left you in such a situation. You also have to make it clear, in this case, that the situation is not due to their service, but rather that there have been events that were beyond your control.

What to Include in Your Hardship Letter

You also have to make sure that the insurance company can easily find you. Hence, you must include your name and address, as well as your policy number. You also have to make sure that you include details of the payments that you have already made. You want them to make a special exception for you, allowing you to end your contract before the date is due, and this means that you have to give them reasons to do so. For instance, you should tell them if you have always made your payments on time, or if you still have, and aim to keep, other types of insurance with the same company.

Difficulties That You May Encounter

In most cases, insurance policies can simply be canceled. However, there are situations in which that is not possible, particularly if you have taken out a contract with a fixed end date. One key difficulty that you may encounter here, is if you want your insurance company to provide you with a refund for any money that you have already paid towards your insurance policy for future months. You will have to give very clear reasons as to why you believe your insurance should not just be canceled, but also that you should get a refund. There are certain situations in which this would be accepted, for instance, if you have experienced a sudden loss of work, if there has been a death in the family, or if you have received substantial medical bills after an illness.

Insurance Cancellation Hardship Letter Example

{Phone #}


Dear {representative}:

I am in the fight of my life against {disease}. It is a fight in which the odds are statistically against me. It is a fight that demands my singular focus. Bizarrely, I must simultaneously wage a battle for preservation of my medical insurance benefits.

Throughout my debilitating treatment, the clock has been ticking. During radiation, the letters came: my job will be held for {time period} but I will lose my health benefits in {time period}. In a post-chemo fog, I opened another letter stating that {time period} is fast-approaching and I must either return to work or file for COBRA benefits. I cannot return to work at this time. Not only can I barely walk across my living room on bad days, {disease} legally bars me from driving until six months have passed since {my last seizure}. COBRA payments far exceed what I am receiving in short-term disability benefits; in fact, the {amount} payment quoted is {double our mortgage}.

I remain optimistic about my survival. And I have great faith in my fellow humans: several kind-hearted coworkers have graciously donated sick leave hours to me. Still, I fall short of the {threshold} required by {time period}.

I cannot overstate my sense of outrage and fear at the injustice and irony of losing my health coverage due to a health crisis.

Please fix this.


{Sender Name}

Writing A Hardship Letter To Social Security

A hardship letter to Social Security is also known as a “dire need” letter. Only certain situations are classed as dire need, so it is very important that you consider those. Disability claimants, in particular, are commonly affected by financial hardship. They may not be able to obtain their needed medication, go to hospital for treatment, or meet the expenses for their critical care. On top of that, they struggle to pay their standard monthly expenses, such as mortgage, rent, and utilities.

Dire Need According to the Social Security Administration

It would seem that those types of situations would always be classed as “dire need”. Unfortunately, the Social Security Administration (SSA) does not agree. The reality is that the SSA does not truly care when a disability claimant, or other Social Security benefit claimant, ends up with crumbling finances that make it impossible for them to live a decent life. They will evaluate the concerns when a hardship letter is received and process the claim, but you should never assume that the claim will be accepted.

The Process at the SSA for Evaluating a Claim

If you have sent a hardship letter, you will have already gone through the original claim in which you requested certain benefits. Several standard reconsideration steps can be followed should you not agree with the decision made based on your initial application. Eventually, you will have to request a hearing in front of an administrative law judge (ALJ), at which point the Office of Disability Adjudication Review (ODAR) will determine whether your situation is truly dire or not. In the past, this was done by the Office of Hearings and Appeals. Unfortunately, this is a lengthy process and, by this time, the original claim might have been initially made as much as a year ago, if not more.

Write to the Nearest ODAR office of the SSA

One of the best things you can do is send your hardship letter to the SSA directly to your nearest ODAR office. In so doing, you may be able to expedite the process substantially, sometimes by as much as several months. To achieve this, however, you must ensure that your letter includes enough details and compelling evidence to show that your financial situation is truly unmanageable. You should also include photocopies of things, such as your income, your expenses, and late payment notices from your mortgage provider, landlord, or utility providers, and so on. You must also be able to prove that you have already made all possible attempts to lower your expenses.

Unfortunately, even if you write directly to the ODAR office and they agree to give you a hearing sooner than usual, you will still have to wait several months in total. On the other hand, those few months may just prevent you from losing everything that you earned before you became disabled in the first place. You should also make sure that you write hardship letters to your creditors, so that they are aware of your situation and the fact that you are awaiting an appeal with the ODAR office. They are more likely to be more lenient than the SSA after all.

{Your Name}
{Your Address}
{Your Phone Number}

{Financial Institution Name}
{Phone Number}
ATTN: {contact person}

To Whom It May Concern:
I am writing this letter to request that my Social Security disability claim be processed as a dire need case. I understand that the process is long and difficult for many people, but I believe that I may qualify for critical need.

My situation constitutes dire need because {only possible situations: 1. This is a military casualty case, 2. This is a compassionate allowance case, 3. I am homicidal or suicidal, 4. I have a terminal illness, 5. I cannot afford food, medicine, or shelter}. I am attaching {doctor’s prognosis, psychiatrist’s analysis, military discharge papers, etc.} as proof that my circumstances are critical.

I fervently hope that this case can go through quickly, as my condition is rapidly becoming more burdensome. I am currently unable to {detailed description of your current limitations}. I believe that with my disability claim I could {description of what you would do with the money}.

I appreciate your time and consideration. I look forward to hearing from you soon concerning this matter.


{Sender Name}