What is the purpose of the Hardship Letter?

The Hardship Letter is a communication sent to original creditors.  The purpose of this Letter is to provide your Original Creditors a brief overview of how you arrived in your current financial situation and hardship.  Sometimes it is because of decrease in or loss of income, medical issues, divorce or other serious setbacks. 

Another purpose of the letter is to let the creditor know that you do intend to resolve the debt, given some time. This lets the creditor know that you are not avoiding the debt.  It is the hope that your creditors will regard your genuine explanation of your circumstance as an act of good faith. 

The goal when attempting to resolve your debt, is to stay low on the radar so that let your accounts move naturally through the collection process as slowly as possible to avoid unnecessary heightened collection activity. Typically, an honest and genuine Hardship Letter will help the creditor realize that you are not avoiding the debt and in turn the creditor may be more open-minded when reviewing your account.    Should your account stay “low on the radar”, this could give you more time to save for settlements.  The more time you have to save up for settlements without escalated collection activity, the better!

Remember it is best to keep your hardship letter simple and to the point. Avoid unnecessary details, as your creditor is not likely to be interested in them. Be polite and humble in your letter. State your points in easy to understand format.