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Consumer Debt Negotiation

What is a hardship letter?

Although this is not always the case, hardship letters are usually written based on a mortgage company’s requirements for working out delinquency on your loan payment so that a repayment plan can be established and your home does not go into foreclosure. In the simplest of terms, a hardship letter is written from the debtor to the creditor in order to justify why they have gone delinquent on their account. Usually, the letter will contain two things – your present financial position and a repayment arrangement to bring your account to non-delinquent status.

Five suggestions for writing a great hardship letter

If you find that you are in a financial position requiring the writing of a hardship letter to your creditors, here is what you need to include in that letter to improve the chance of any one of your creditors working with you:

Confirm payment details with creditors first – before you go any further, you want to take this step in the very beginning. You and the creditor(s) will be able to better assess your current financial position when you do this. You want to mention specific details such as the following:

accrued interest
duration left on the payments
total amount payable

In order to avoid any misunderstandings in the future, ask your creditor(s) to confirm what you have included in this part.

Always be honest – don’t try to sugar-coat the situation and just be honest. Remember that you are not the only person to ever experience financial difficulties. You want to take the following steps:

arrangements for the re-payment of your debt
current financial status
the reasons behind your current financial situation
your combined outstanding debts

Keep the letter simple and to the point – don’t get wordy by including details that are not necessary to include in the letter. Creditors and lenders hate wading through this. And by all means, be humble and polite.

Supply applicable documented evidence – whatever documents or statements you have that back up your current circumstances and financial condition should be included with the hardship letter. Your story will not carry a lot of weight without out this and your creditor(s) are less apt to be sympathetic and work with you.

Make sure you send the proper message – since this is your only chance at being able to negotiate a more favourable outcome for you and the creditor, you want to explain as clearly as possible why you are in your current situation.