Are you struggling to fulfil your financial obligations? If yes, then you should consider writing a hardship letter. A hardship letter is a letter written to request for special consideration or leniency in case you are facing financial challenges. The letter will explain to the lender in details your present financial circumstance, why you need special consideration or leniency and plans that you have put in place to overcome financial problems that you are currently facing.

Before you write a hardship letter, you need to determine whether your present financial circumstance warrants a hardship. Remember that lender will check if the reasons given are sufficient to deserve leniency. So before you write this letter, you must be sure that there is a circumstance that makes it difficult for you to cover your financial obligations. Some of the things that lenders are likely to consider include loss of a job, a divorce, a severe medical condition, a reduction in income, natural disasters, change in employment status and much more.

No matter what your reasons are, it is crucial, to be honest, and open with your current circumstance. If the lenders detect that you are not honest with your current financial situation, then they will quickly deny your request. It is essential to be sincerer and also demonstrate to lenders that you are willing to find a solution to the problem.

Tips on how to write a hardship letter

Begin by outlining the purpose of the letter

Your letter needs to start by letting the lender know why you are writing for them. The topic that you want to address should be clear and concise. The more direct and clear you are, the less possibility there is for the confusion.

For instance, you can start like this “I am hereby writing to you to outline my current financial hardship”. This way, the lender will know from the word go that you have financial challenges.

You should then outline changes that you would like the lender to make on your loan but don’t go into details at this point.

You can say something like this. “My current financial situation led me to request a short sale on my home. My present finally situation demands that I modify my loan”.

Explain your situation

When writing on a sensitive topic such as your current financial chandelles, it is quite tough to strike a balance between being carried by emotions and being professional. At one point, you want the lender to sympathize with your situation and see the need to grant you leniency, but on the other hand, you don’t want to send too desperate, angry or entitled.

Lenders are only interested to know why you cannot honour your current financial obligation and plans that you have put in place to ensure that you overcome the challenges that you are currently facing. So please don’t go to explaining things that are not relevant to them because they don’t care about your problems.

Here is an excellent example of what you write. “I am the breadwinner for my family, and I have lost my job. I don’t have any other source of income to honour my financial obligations. I am actively looking for and applying for a job, but so far, my effort has not been successful”.

End your letter by reminding the lenders that you will pay them what you owe once you get a source of income. Be humble and appreciative. Also, be respectful and think the lenders in advance for considering your situation. Don’t get into side issues or blame games.

Attach relevant supporting documents

Attaching relevant finical documents will help the lender get a clear picture of financial challenges that you are facing and thus more likely to grant your request. Some relevant documents to attach include: Information about your monthly gross income, your recent tax return, your monthly mortgage statement, information about your assets and savings and any other relevant information. Ensure that all documents attached are accurate and up to date.

Keep the letter short and precise

The more precise your hardship letter is, the better. Remember that lenders have many other letters to read hence to don’t time to read long details. So, keep your letter short and concise. Only state what you think is important to the lender. Only focus on explaining your financial crisis and what you are doing to overcome the challenge.

State the action you have taken in response to the hardship

It is vital to state the steps that you have made in response to the financial challenges that you are currently facing. This is very important and can help influence the decision of the lender. Be honest and transparent. Lenders are more likely to grant you leniency if they realize that you are doing your best to overcome financial challenges that you are currently facing. Explain that action that you have taken then point out that they are not enough to help you overcome your financial crisis.

Be clear on what you want from the lender

After stating your financial crisis and steps that you have taken to get out of the crisis, then the next step is saying what you want to from the lender. Don’t beat around the bush, instead go straight to the point. For instance, if you want the lender to lower your mortgage interest, then you can say, “I need you to lower the mortgage interest rate”. Be as clear as possible when stating what you want from the lender.

Mistakes to avoid

Writing a hardship letter is not as easy as many people think. Some people let their emotions take the better part of them. Below are some of the mistakes you need to avoid when writing a hardship letter.

Please refrain from using the letter to express your anger, make a political impression or use it to bargain
Refrain from criticizing the lender
Refrain from making promises that you cannot fulfill. The lender will use your words against you.
Refrain from outlining things that are not relevant to the lender.