Hardship Letter

Hardship letter summary:

• A hardship letter alerts your creditors that you're experiencing financial hardship.

• In it, you lay out what caused the hardship, when you believe the hardship might end, and the changes you're requesting during the hardship.

• Changes may include waived fees, reduced payments, or even a payment pause.

Hardship Letter Definition and Meaning

You write a hardship letter to a creditor when you're experiencing financial hardship (like a job loss or the death of a family member) that makes it difficult to keep up with your payments. You explain your situation and request changes to your payment agreement to help you keep your account in good standing until things have improved.

It's up to the lender to decide whether to approve your request. Many creditors will likely want to see documentation proving your hardship before making their decisions.

Key Components of a Hardship Letter

Here are the most important pieces to include in your hardship letter:

• Introduction: Give a polite greeting, introduce yourself, give your account number if you have it, and state that you'd like to request financial assistance.

• Hardship explanation: Briefly give the facts of your financial hardship, including what caused it and when you think it may end (if you know).

• Steps you're taking: Creditors like to know you're doing all you can to keep up with your payments, so detail steps you're already taking, like budgeting and reducing spending.

• Your request: Ask the creditor for assistance, whether that's a temporary pause on your payments (deferment or forbearance), a lower interest rate, a lower payment, or waived fees.

• Supporting documents: If you have documents to back up your claim of hardship, like an unemployment notice or doctor bill, include copies with your hardship letter.

Remain polite throughout the letter, and remember that it's up to the creditor to decide whether to grant you assistance. Continue to make your regularly scheduled payments until you hear back from the creditor in writing.

Also note that you may not need to send your letter by mail. Some creditors have online tools for submitting requests. Check with your lender to see what options are available.