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.

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