A hardship letter must be concise, honest, and focused solely on the facts of your financial situation. Avoid emotional rants, blaming lenders, oversharing personal, irrelevant details (e.g., medical diagnoses of family members, petty complaints), long-winded stories, or making unrealistic promises you cannot keep. Focus on the specific, temporary cause of your financial distress and your plan for recovery.
The letter provides specific details such as the date the hardship began, the cause and how long you expect it to continue. Many creditors will require a hardship letter if you request help. In your hardship letter, you should include a detailed description of the type of assistance you are requesting.
For example, you'll have to explain:
Explain Your Financial Hardship Honestly
Provide a straightforward and truthful explanation of why you're facing financial difficulties. Whether it's due to a job loss, illness, or other reasons, be transparent about your situation to help the reader understand your need for assistance.
People do this for many reasons, including: Unexpected medical expenses or treatments that are not covered by insurance. Costs related to the purchase or repair of a home, or eviction prevention. Tuition, educational fees and related expenses.
Information that is relevant would include:
A hardship is generally an unforeseen, significant financial or personal difficulty preventing someone from meeting basic needs or obligations, such as job loss, major medical bills, funeral expenses, or preventing eviction/foreclosure. The IRS defines it as inability to pay reasonable living expenses (food, housing, healthcare). Specific criteria vary by context (e.g., loans, retirement plans, government aid), but usually involve an immediate, heavy need beyond one's control, often requiring proof like bills or income statements.
Provide supporting documents along with your hardship letter to help prove the legitimacy of your claim. Depending on your situation, you might submit documents such as an unemployment notice, medical bills, military orders or a divorce decree.
Here are the specifics on what to include:
Medical conditions can be a compelling reason for an extreme hardship waiver if your U.S. citizen or LPR spouse or parent depends on you for care. Supporting evidence like medical records, doctor's letters, and prescriptions can prove this hardship.
Contact your creditors immediately; don't wait for them to contact you. Even if your payment history is less than perfect, you will still make better arrangements by being forthright. Explain your current situation. Tell them your family income is reduced and you are not able to keep up with your payments.
Our situation is (temporary, short term, or long term). We have tried to resolve the hardship by (list what you have done to try and resolve the hardship. For example, reduced your expenses, picked up a second job, etc.) We need your help because (explain why you need help from the lender/servicer to avoid default.)
If you've experienced a job loss, reduction in hours or unexpected medical emergency, gather paperwork that shows when and how your income changed. A termination letter, doctor's bills or disability paperwork can substantiate your claims and show that your hardship isn't temporary irresponsibility but a genuine crisis.
To be able to get a Recoverable Hardship Payment, you have to make an application - it is not automatic. You will need to give evidence of why you will be in hardship if you don't get a payment. You will also need to agree to pay back the Recoverable Hardship Payment.
The consequences of false hardship withdrawal can range from fines and penalties to tax implications or even jail time. Additionally, lying to an employer can severely hinder your career growth or result in job loss. In other words, if you don't qualify, seek an alternative solution.
bank notice, for example, overdraft call or mortgaged property repossession. overdue medical bills. letter from a doctor verifying the inability to earn an income due to illness or caring for a sick family member. final notice from school regarding payment of mandatory fees.
Using the loan to pay off credit card debt may not meet the hardship criteria set by some plan administrators, as hardship withdrawals are generally restricted to specific circumstances defined by the IRS, including: Medical expenses. Costs related to purchasing a primary residence. Tuition and educational fees.
You or your partner or children must be experiencing hardship and in most cases you must show that you or your family will suffer hardship unless benefit is paid. In some cases for JSA, you must be in a 'vulnerable group'.
Lack of health insurance, reduced income during illnesses, and costly medical procedures make getting sick a very costly situation. Divorce. Half of married couples do it - some more than once. And there is nothing that will cause financial problems faster than divorce.
bank statements showing a reduction of income, essential spending and reduced savings. a report from a financial counselling service. debt repayment agreements. any other evidence you have to explain your circumstances.
Your hardship letter should be honest, concise, and under one page. It should explain your current financial situation and what caused it.