What to Include in a Financial Hardship Letter

When a person encounters financial hardship that prevents him or her from making payments on a loan, credit card, or any other regular type of bill, lending and credit companies may be willing to renegotiate the terms of the agreement in order to allow the borrower to make payments on time. Lenders are businesses and do not want to deal with the problems of borrower default and might therefore be willing to adjust interest rates, principals, or other acute variables. In order to convince a lender to bend the terms of a contract a borrower must compose a hardship letter. 

A hardship letter should be short, concise, and factual. Sometimes borrowers become too emotional in their hardship letters and stray from explaining a situation clearly to pouring emotion onto a page. Hardship letters should be no more than one page long and should not be meant to achieve sympathy from the lender. 

The most important part of a hardship letter is the beginning of the letter where the borrower needs to state his or her exact request. If a borrower wants to decrease monthly payments, then he or she needs to explain the exact amount that he or she can afford each month and how he or she intends to make those payments. If the borrower wants to lower the principal on a loan, he or she must specifically state how this will solve the payment problems. If a specific request is not made, the lender will not suggest a change.  Borrowers need to create a specific payment plan and schedule and put that in the letter.   

Also included in the beginning of the letter must be the exact circumstance that led to the inability to pay. If a job loss was the cause, simply state that fact; do not present sides or attempt to reason the job loss out.  

As the letter goes on the borrower should explain specific cash flow problems, income tax statements, and bank statements. The specific documents associated with these finances can be included as attachments to the letter. The more organized and comprehensive the financial documents are the more willing the lender will be to treat the borrower as a valuable customer.

The borrower should also explain that he or she wants to get back onto a regular payment schedule. He or she must prove that the intention to get back on track is strong. The borrower should be thankful to and appreciative of the lender. 


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