Updated August 22, 2023
A financial hardship letter is written by an individual to request a payment extension, a loan modification, or forgiveness due to extreme financial circumstances. Commonly used after a job loss, illness, death, or another unforeseen event, the financial hardship letter explains to a lender why the individual can no longer make regular payments on a mortgage, loan, rent, or any other bill.
By Type (8)
- College (Financial Aid)
- Landlord (Rent)
- Loan Modification
- Medical Bills
- Mortgage
- Jury Duty
- Short Sale
- VA (Veterans Affairs)
Table of Contents |
How to Write a Financial Hardship Letter (5 steps)
- Explain the Problem
- Illustrate the Severity of Your Financial Hardship
- Demonstrate Your Efforts to Remedy the Situation
- State Your Request Clearly
- Provide Evidence
1. Explain the Problem
What is impacting your ability to make payments? Be direct and specific. Provide a timeline of events to paint a clear picture for the lender of how your financial situation has changed. For example, if you are unable to make payments due to an accident that limits you from working, you should include when and where the accident happened, the details of your physical injuries, and how long you have not been able to work.
2. Illustrate the Severity of Your Financial Hardship
Provide some specifics about how your income, assets, or expenses have been directly affected by the unforeseen event. For example, if a physical injury is keeping you from working, detail exactly how much income you have lost and will continue to lose in a specified timeframe. If there are hospital bills or other accident-related expenses, be sure to include that as well.
3. Demonstrate Your Efforts to Remedy the Situation
Since your financial circumstances took a turn, what efforts have you made to rectify it? This is where you should briefly list your efforts, whether failed or fruitful, to fix your current situation — such as applying to new job openings or cutting out expenses — and how these efforts are not enough on their own.
4. State Your Request Clearly
Given the financial situation you’ve explained, what is it that you’re asking your lender for? Whether it’s a payment extension, a waiver on late fees, a reduced payment amount, or loan forgiveness, be sure to be specific in your request. The letter should justify why this request is worth the lender’s consideration.
5. Provide Evidence
The stronger your case is, the more likely it is that your request will be granted. Be sure to back up your claims with the appropriate paperwork, which you can attach to the letter. Common supporting documents include hospital bills, paystubs, bank statements, a letter from the employer, and more.
Sample #1
Joe Jonas
1234 Broadway St.
Los Angeles, CA 90002
joe@gmail.com
(213) 123-4567
Sep. 22, 2022
QuickenLoans
139 Cash Way
Las Vegas, NV 88901
To Whom It May Concern:
I am writing this letter to request a modification on my mortgage loan due to unforeseen financial hardship. When I was initially approved for this loan in 2019, my gross monthly income as a middle school teacher was around $4,000. However, after being laid off in June 2022 due to budget cuts across the school district, I have been living off of my savings and unemployment benefits, which is less than 50% of my original income as a teacher.
Until I am able to secure a new teaching position in another school district, I am requesting that my monthly payment amount is reduced from $2,000 to $1,200. This temporary reduction would allow me to continue making payments on the mortgage.
Please find attached a letter from my former employer, unemployment documentation, as well as my bank statements. Thank you for your time and consideration. Please feel free to contact me anytime.
Sincerely,
Joe Jonas
[Signature]
Sample #2
Jenny Cardano
1234 Gateway St.
New York, NY 10211
jennyc@gmail.com
(212) 123-4567
Aug. 10, 2022
Betty Smith
Financial Aid Office
Sparkling University
Dear Ms. Smith,
I’m Jenny, an incoming freshman at Sparkling University, and I’m writing to request a reconsideration of the financial aid package I received for this upcoming school year.
Last week, my parents were forced to permanently close down their restaurant due to unforeseen circumstances. With our family’s primary source of income no longer viable, my parents have been struggling to keep up with mortgage payments and other bills. They have been applying to jobs but have not had any success yet. I’ve continued to work at my part-time job as a baker, but my minimum wage is not enough to cover my tuition under my current financial aid package. Despite these difficulties, I would really love to fulfill my dream of going to college this fall.
Under the circumstances of my family’s new financial situation, I am requesting a review of my financial aid package and awards. Please find attached a copy of my parents’ bank statements, business documentation, and mortgage bills. I sincerely appreciate your time and consideration.
Jenny Cardano
[Signature]
Sample #3
3209 School Rd.
Duluth, MN 55802Sep. 21, 2022Loss Mitigation Dept.
Duluth City BankTo Whom It May Concern,I am writing to request a short sale for my property at 3209 School Rd. in Duluth due to extreme financial hardship from an unforeseen illness. Since purchasing my home in 2018, my financial circumstances have changed drastically, and due to my health issues, I am no longer able to sustain my income as a full-time high school PE teacher.
Six months ago, I was diagnosed with stage-three lung cancer and have been receiving chemotherapy at the local hospital. I received a crucial medical operation last month and was hospitalized for three weeks. The cost of these bills continue to add up and already exceed the balance of my savings account. On top of that, with other living expenses and bills and no regular income, I am unable to make monthly payments on my mortgage. I plan to move in with my sister, who will be my caretaker as I continue my chemo treatment.
Due to these circumstances beyond my control, I am requesting a short sale on my property as my last resort. Please find attached all my supporting documents, including medical documentation and bills, my bank statements, and a letter from my employer. Thank you so much for your consideration.
Sincerely,
Jack Black
[Signature]