How To Write A Hardship Letter (2024)

Writing a hardship letter to one or more of your creditors can help you get through a tough financial time. With an understanding of your circ*mstances and evidence to support your claims, lenders may be willing to give you a more manageable debt payment plan.

What Is a Hardship Letter?

A hardship letter explains to a lender the circ*mstances that have made you unable to keep up with your debt payments. It provides specific details such as the date the hardship began, the cause and how long you expect it to continue. You’ll also want to state how you’d like your lender to help, and how your proposed solution will benefit them.

You may want to ask for one or more form of relief, including:

• Pausing your payments
• Reducing your payments
• Securing a lower interest rate
• Extending your loan term
• Forgiving late fees
• Ending your financial obligation for less than the full amount you owe

For example, you might be able to tell the lender: “With a six-month reduction in my interest rate, I will be able to avoid going into default. I expect to find a new job within that time frame. At the end of six months, I will continue making my regularly scheduled payments at my current interest rate.”

What Qualifies as a Hardship?

A hardship is a negative event outside your control that has harmed your finances. Some examples of events that a lender may consider to be a financial hardship include:

• Layoff or reduction in pay
• New or worsening disability
• Serious injury
• Serious illness
• Divorce or legal separation
• Death
• Incarceration
• Military deployment or Permanent Change of Station orders
• Natural or man-made disaster
• Long-distance job transfer

Sometimes these events may have happened directly to you, and other times they may have happened to someone you rely on or take care of. For example, a serious illness that affects your child may have forced you to work less and increased your household’s medical bills.

For contrast, some circ*mstances a lender may not consider a hardship include:

• Loss in property value
• Overspending on nonessential items and activities
• An interest-rate increase on an adjustable-rate mortgage or home equity line of credit
• Temporary income disruption that you can manage with liquid assets or assets that can be liquidated

Do You Even Need to Write a Hardship Letter?

You may not need to write a hardship letter to get the help you need. Some financial institutions provide all the information to request hardship assistance on their websites.

Bank of America, for example, has a page for home loan assistance that walks you through your options, shows what documents you might need and provides phone numbers you can call to ask for help. Through their site, you will learn that if you are struggling to pay a mortgage owned by Fannie Mae or Freddie Mac, you will need to complete an official mortgage assistance application and attach any required documentation.

Some mortgage servicers, such as Fifth Third Bank, will even allow you to complete a hardship application online.

Similarly, American Express has a page where its credit card customers can learn how to request financial relief in the form of temporarily lower monthly payments and interest rates. You may be able to view plan options and enroll by logging into your account online. Other creditors also offer ways to request financial hardship assistance online while logged in to your account.

If you will be making a phone call or speaking with someone via online chat, writing a hardship letter first might help you organize your thoughts. Instead of writing a complete letter, though, you may find it easier to write a script or make a list of bullet points you want to address.

How to Write a Hardship Letter

Get the contact information for your lender’s loss mitigation department. You want to send your letter to a person who is empowered to help you. Include your loan number, name, address and phone number to help the lender identify your account and respond to your inquiry.

State the facts. What caused your situation? What have you done to solve it? Why do you need the lender’s help? Include the date your hardship began and an estimate of whether the problem will be short term (six months or less) or long term.

Do not allude to potential sources of outside money that you might be able to access, such as borrowing money from a family member. This information might hurt your chances of getting help from your creditor—not to mention that your family member would surely prefer to be left out of your financial problems.

Most of all, be concise. Your letter should be no longer than one page.

Be Original

It can be helpful to look at hardship letter examples before writing your own. However, you may undermine your case if you copy and paste a template you find online. It will not be specific to your situation, it will not sound sincere and some of the examples we’ve reviewed have errors or are poorly written.

Be Honest

The best way to show the lender that you’re being truthful about your hardship is to include documents that support your statements. Examples of documents you might want to submit include:

• Bank and brokerage account statements, excluding funds in retirement and college savings accounts
• Recent paystubs documenting current and year-to-date earnings
• Form 1099s or W-2s showing independent contractor and employee income
• Current year and previous year’s signed tax returns
• Employment termination letter
• Medical bills
• Accident reports/police reports
• Repair bills for losses not covered by insurance
• Military orders
• Divorce decree or separation agreement
• Alimony (spousal support) or child support orders
• Death certificate
• Proof of incarceration
• Monthly budget/detailed list of monthly expenses
• Proof of unemployment income
• Disability award letter
• Proof of public assistance
• Notarized affidavit (sworn written statement witnessed by a third party)
• Homeowners association special assessment letter
• Property tax increase notice
• Profit and loss statement for your business

Stay Focused on Goals

Remember that you’re seeking a specific outcome from your hardship letter. State the facts and keep your emotions out of it.

Your letter should propose your ideal solution, or a version of your ideal solution that you think a lender would find reasonable. Give them something they can either accept outright or use as a starting point. Make it easy for the lender to understand what you need and how they can help you.

Have It Reviewed

Even professional writers need others to look over their work. Ask at least one person you trust to read your hardship letter and give you their honest feedback. Is the letter readable? Have you clearly stated your case? If they worked for your lender, would they want to help you?

Sample Introduction

Sometimes the hardest part of a letter is the opening paragraph. Once you have that down, the rest is easy, especially if you have an outline.

The introduction below is straightforward. It does not waste the reader’s time. It states why you are writing and demonstrates that you understand how the process of requesting hardship assistance works. It also provides an outline for what you will cover in the body of the letter.

July 27, 2021

Re: Account no. 1234567

Dear Lender,

I am writing to request financial hardship assistance with my (mortgage/credit card/student loan/auto loan/personal loan/etc.). This letter provides the details of my hardship, the type of assistance I am requesting and the documents that show my hardship.

Bottom Line

If you’re going through tough financial times, you’ve probably experienced a range of emotions: sadness, fear, panic, despair, even shame. You might be feeling alone, but please know that going through financial hardship happens to a lot of people, and creditors are experienced in dealing with these matters.

Reaching out to creditors may be one of the easiest ways to ask for help. You don’t have to worry about straining a personal relationship by asking a friend or family member for a loan. Instead, you’re just negotiating a business arrangement with someone who won’t personally experience any consequences if you pause or reduce your payments for a while. A hardship letter can help you have that conversation with creditors and get financial relief.

Personal finance expert Amy Fontinelle contributed to this article.