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How to Write a Letter of Hardship to Creditors

Ashwini Kulkarni Sule Jan 23, 2019
Hardship letter is the letter from a debtor to the creditor, justifying reasons for delinquency in debt repayment. Conveying the details about your current financial position and your plans to arrange for the payments form an integral part of a hardship letter.
The current economic recession has affected us in the most adverse ways. Millions of people all over the world have been laid off as a result of cost cutting measures by the companies. This has landed several people in critical financial positions. They are unable to pay their debts as they no longer have their jobs to support their cost of living.
Inability to pay installments on time means a great deal of harassment from the creditors. Most people try to escape this situation by borrowing more money and ending up in a vicious circle. Some others wait for the situation to stabilize itself, which it never does. While, a few others may file for bankruptcy as a last resort.
Whichever option you may choose, it is always better to communicate with your creditor. Financial hardship letter is your way to initiate re-negotiations with your creditor and preventing him from taking drastic actions against you.

Guidelines for Writing a Letter of Hardship

Remember, a letter of hardship can be your only way of getting out of the hassles that result from non repayment of debt. Hence, you must be extra vigilant regarding what you put down in your letter. Give a great deal of thought to the justifications you intend to give for non repayment as well as devise a convincing strategy for repayment.

Confirm Your Payment Details

This is the most important point while writing a hardship letter, as it is the basis upon which you and your creditor would be able to assess your financial condition. In your letter of hardship, mention the details such as accrued interest, total amount payable, duration left and ask your creditor to confirm them so as to avoid misunderstandings in future.

Be Honest

Most people experience a financial crisis at some point of their life, so there is nothing to be ashamed of. Therefore, explain in detail your current financial status, the reason for it, your withstanding debts and your plans to arrange for the debt payments.
Request the creditor for convenient installments or a waiver on a part of an interest. It is likely that the creditors might consider your request, since there is a chance for them to at least get some amount back. On the other hand, if you file for bankruptcy, they will get none.

Keep It Simple

Keep your hardship letter simple and to the point. Avoid unnecessary details, as your creditor is not likely to be interested in them. Do not forget to be polite and humble in your letter. State your points in easy to understand format.

Supply Documentary Evidence

Supply all the necessary documents to back up your claims and condition. Without adequate documentary evidences your story would just be another 'cock and bull story' for your creditor. The more genuine you sound, the brighter your chances of debt negotiation with the creditor.

Send The Right Message

Make sure you send the right message through your hardship letter, as it is your only chance of re-negotiation. Explain clearly the circumstances that landed you in delinquency. There is no harm in sounding a bit sentimental but make sure you know where to draw a line or else you will end up sounding too dramatic and fake.
Though, a hardship letter can definitely invoke possibilities of re-negotiation with your creditor, your job doesn't end here. It is always better to be prepared if the things don't work in your favor. Assess your financial position and find out ways to arrange for payments without piling up your debt.