When considering a mortgage modification or credit negotiations, having a financial hardship letter can help you demonstrate your need for assistance. A financial hardship letter is a formal document. It states, in so many words, your intention to be the best possible borrower given extraordinary circumstances. You want to emphasize that you could not avoid your current financial problems, but that you are ready to act in good faith to resolve your credit issues.
What to include in a good hardship letter
- Reasons WHY you are behind on your payments. Include dates of events, like the start of an illness, that are concurrent with your delinquency.
- Make an offer they can’t refuse. You should do your very best to demonstrate how you plan on paying back the loan in full. Be detailed here, and show how you will be financial solvent in x number of years, but don’t ask the bank reduce your loan if you can avoid it.
- Demonstrate your willingness to participate in a payment plan, workout solution. Banks have schema designed to help embattled borrowers get back on track. Once you have expressed a desire to play ball, they should take the next step.
- Include pertinent personal data. This is, for the most part, leaving all pertinent biographical information: address, phone number(s), email. You may want to go so far as to include a little more about your work situation. Also be sure to include late notices and paystubs that show your current economic hardship.
- Be gracious. No one wants to read a nasty letter. For many people, it should be obvious to say thank you and express a hope that you can work together with the bank amicably. Being belligerent suggests to the bank that you will be impossible to work with, and will only be a continued waste of time and bank resources.