There are five steps you need to follow to be able to write your own letter of financial hardship to your creditors. Remember too that you're going to need some documented proof of your current hardship and your current financial position.
- The first thing you need to do is state the intention of the letter to the creditor within the first paragraph. For instance, you may want to start by saying that you are writing to inform your creditor of the extreme financial difficulties that you have fallen upon. You should continue by stating that this has caused you to fall behind on your repayments. You should then explain what it is you are actually asking of your creditor, which might include an extension on the payment or even an opportunity to refinance your loan or credit agreement.
- The second thing to do is explain your situation in more detail. You will need to give the creditor some details about the circumstances which have caused this current state of financial difficulty. Your circumstances may include unemployment, divorce, death of a spouse or some unforeseen medical emergencies. These are the most common issues and they are usually considered by creditors.
- You then need to enclose some copies of the documents I mentioned earlier which back up your claim of being in a position of financial difficulty. You will also need to note at the end of your second paragraph that the documents are enclosed in the letter.
- You should use the third paragraph to make a note of the steps you've taken to help yourself get back on track. You should also talk about your willingness to negotiate with the lender about even some temporary changes so that you can get back on track.
- Finally, thank them for their time and tell them you look forward to hearing from them.