The current financial upheaval has resulted in many people finding they have difficulties in repaying a loan or mortgage. While they may have felt very secure financially a short time ago, they now find that circumstances they had not forseen has resulted in them facing financial difficulties.
One of the most important steps in dealing with financial hardship is to keep your lenders informed. It is much better to provide them with a hardship letter at the start of a crisis, than have them find you have missed payments without explanation.
A hardship letter sent at the right time will show that you are a responsible borrower, and are willing to work the problem. A lender is usually happy to agree to a new payment structure when you show that you can be trusted to keep them informed.
Format for a hardship letter
Our sample hardship letter provided below will give you some ideas on how to structure your own letter. People find themselves in financial hardship for a variety of circumstances. The most common include
- loss of a job
- unexpected long-term illness
- events such a children going to university or college, or getting married
- a couple getting divorced
- the death of a partner
- the collapse of a business
Any of these problems can arrive unexpectedly, and can result in financial hardship for an individual or their whole family. Whatever the circumstances it is important to deal with the problems, and not avoid or deny them
Sample Hardship Letter
When writing a hardship letter , the first consideration
is who to address it to. You will usually have an address provided by the lending company, but it may be worthwhile phoning them to ask who best to send the letter to. In constructing a hardship letter, there are a number of important pieces of information you should provide:
- Identify yourself, including any references numbers or account numbers provided by the lender
- Identify the services they are providing to you, whether it be a loan or a mortgage.
- Give a brief description of the circumstances that resulted in you being in financial hardship.
- State the expected length of time you might expect to be in financial hardship, and what the prospects are of your situation changing.
- Request a meeting to discuss the options available for stabilizing and recovering from the situation.
Providing a hardship letter with the information outlined above will show that you are keen to face up to the situation and get back on track as soon as possible.
You can use 'Dear Sir', 'Dear Madam', 'To whom it may concern.
Your hardeship letter should state who you are, and what service the recipient is provding for you.
Explain what your problem is and why you have difficulty in making the payments previously agreed. Do not be over-emotional or use too much detail. Any detail that is needed can be supplied on request.
Ask if you can arrange a meeting to talk about your problem. A face-to-face meeting is always best where possible. Most issues are more easily resolved with human contact.
You may find it useful to offer to answer further questions orsupply additional information if requested
Close the letter formally using 'Yours faithfully'.
Format for a sample hardship letter
23 High Street
Ph. 01234 123456
June 3rd 2008
My Mortgage Company
67 Main Street
Ph. 01234 234567
Re: A/C 345QWE789
I am writing to you regarding a problem I have in meeting my current payment schedule, and hope that a satisfactory solution can be found.
I have recently been made redundant by my employer. This has resulted in a significant drop in our household income, and it will be difficult to maintain our mortgage payments at their current level. We can continue to make payments at a reduced level, and I would be hopeful of finding further employment in the near future. It is our goal to avoid foreclosure and to keep our home.
I would like to discuss our situation with you in more detail, and will contact you to arrange a meeting at a convenient time.
Please feel free to contact me should you need further information..
John T Smith
Our sample hardship letter can be edited as required, but should
provide a good template for a hardship letter. Amend and add details as required, and use our sample hardship letter template to start making appropriate financial arrangements as early as possible.