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How to Write a Financial Hardship Letter

If you’ve fallen behind on your bills due to unexpected struggles, you may be able to get relief with a financial hardship letter.

August 24, 2022

You never know what life might throw your way — and quite often, that can include unexpected financial hardships. Whether you’ve lost your job or are staring at massive medical bills, changes to your financial situation can make it hard to keep up with mortgage payments or other debt payments.

When these circumstances arise, you don’t want to sit tight and hope that your lender won’t mind if you miss a few payments. By writing a financial hardship letter, you can secure a loan modification or another adjustment that will help you avoid more severe financial consequences for falling behind on your bills.

By understanding what should be included in a financial hardship letter and how to effectively state your case, you are more likely to remain in good standing with your creditors until you can get your finances back on track.

In this article, we’ll cover what a financial hardship is as well as why and how you’d write a financial hardship letter to your lender.

What is financial hardship?

Financial hardship is any type of financial problem that keeps you from being able to manage regular payments on your debts or expenses.

Common examples of financial hardships that can affect your personal finances include:

  • An injury that makes you unable to work

  • A layoff, furlough or other loss of income

  • A natural disaster

  • The death of a family member

  • Divorce

  • Military deployment

  • An extreme change in terms of adjustable-rate loans

An account that enters delinquency will almost immediately hurt your credit score once the lender begins reporting the missed payments. If you go too long without making payments, they may have a collection agency try to collect your debt. Homeowners may be forced into foreclosure. Car owners may have their vehicle repossessed.

By proactively writing a financial hardship letter that explains your situation, you can work with your lender to find a solution that helps you resolve your debts with a less severe impact on your life.

Know the goal of your letter

No two families are alike, and as a result, financial hardships can impact each family differently. When you write your financial hardship letter, have a clear goal in mind — the key thing you want to accomplish with the lender or collection agency you are writing to.

The specific goal of your letter depends on how your current difficulties have impacted your finances. For example, if you’ve accumulated significant credit card debt that you can’t repay, you could request that your credit card company lower your interest rates or minimum monthly payment so you can better manage repayments.

Homeowners may ask their mortgage company to agree to a short sale or for a modification of their loan. Other requests you could make of your lenders include suspending past due balances, putting payments on hold for a few months, settling the account or bringing the account current.

If you’re not sure which solution would best help your financial situation, it may be wise to consult with a personal finance professional.

How to write a compelling financial hardship letter

How you write your financial hardship letter will help you make a compelling case to your lender. 

Keep your letter concise — one page or less is best. Be honest and accept responsibility for your role in the financial difficulties you’re experiencing. Dishonest statements will be discovered when your lender does their due diligence to process your request. And trying to blame others for your own misfortune won’t garner you much sympathy — especially if you try to blame the lender or their employees for not helping you sooner.

Following are key pieces of information that every effective financial hardship letter needs.

Your contact information

Your contact information should go at the very top of your financial hardship letter. This includes your phone number, email address, and mailing address so that the lender can contact you after they receive your letter. Also, include your account number to make it easier for the lender to find and validate your loan information.

Specific details about your financial hardship

The bulk of the letter should be devoted to describing the nature of your financial hardship as well as the type of resolution you want to achieve. Clearly explain the hardship that has created your financial difficulties as well as how the creditor granting your request will help you get your finances back on track and how you’ll be able to fulfill your payment responsibilities in the future.

For example, if you suffered an injury and are unable to work, include the specific date that the injury occurred.

Explain how this situation has affected your finances, such as requiring you to use your credit card to pay medical expenses or leaving you unable to pay other bills. Include precise dollar amounts whenever possible as well as details of what you’ve done to try to keep up with your payments despite your hardship.

Finally, inform the lender whether you expect your situation to be temporary or permanent. After all, while some injuries may only keep you sidelined from your job for a few months, others could keep you permanently out of the workforce.

Make it clear that you intend to fulfill your payment responsibilities but that you currently don’t have the means to do so.


Supporting documents

Supporting documents can go a long way in making your case for financial hardship. Some lenders actually require an affidavit rather than just a letter. Documents such as tax returns, pay stubs, bank statements and medical records can help prove that your hardship is real and has significantly affected your finances.

These documents can put your current situation into perspective, while also offering the proof a skeptical lender might need to take your request seriously.

A sample financial hardship letter

Here’s a short sample hardship letter for someone whose spouse passed away.

[Name of account holder]

[Account number]

[Phone number]

[Email address]

To whom it may concern,

My spouse passed away on [date] and didn’t have life insurance. As a result, our household was reduced to a single income. This loss of income has caused me to fall behind on my mortgage payments, as my income is no longer sufficient to cover both the mortgage and other basic living expenses.

Since my spouse’s passing, I’ve worked to restrict my budget to better meet these needs, but I still don’t have enough to cover all of my financial responsibilities. I am actively searching for higher-salary work so I can cover all my expenses. I believe a temporary reduction in my monthly payments will enable me to stay current on my account and resume normal payments once I find a better job.

Thank you for your consideration. Attached to this letter, you’ll find supporting documents detailing my current financial situation. Please contact me at your earliest convenience so we can work out a solution.


[Name of account holder]

There’s more than one way to deal with financial hardships

While writing a financial hardship letter can help borrowers avoid going into foreclosure or experiencing other major financial consequences, there’s no guarantee a creditor will agree to a new repayment plan or lower interest rate. Actively working to pay down your debts (even when your finances aren’t stable) can go a long way in reducing the impact of unexpected financial hardship.

If you’re struggling with credit card debt, check out the Tally†credit card payoff app. The Tally app allows you to combine your credit card debts into a single monthly payment so you can pay off your debt more quickly and efficiently.

To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.