Sometimes, the simplest way to help you get out of a financial mess is to take out a simple hardship letter. The loan companies would never believe you were in need, so make sure you explain the situation clearly. You should also consider how your hardship letter will be used.
Many people get into trouble by forgetting to send out their lender’s paperwork until after they visit their creditor’s office. There, they are given information to sign on behalf of the borrower. And when it comes time to make a decision, the paperwork may have been overlooked. Therefore, the borrower might have an even harder time getting out of debt with a simple hardship letter.
When you file for bankruptcy, you will be asked to provide the creditor with a hardship letter. In most cases, the creditor will turn over the documents within five days. You can also have the creditor sends you copies, which you can then fax to the Bankruptcy Court Clerk.
Being in a dire financial situation is not the same as having no means to pay off the debt. Make sure that you understand the specifics before writing the letter. For example, you should be able to provide proof of income and show that you would be unable to repay the debt on your own. In many cases, you can still pay the debt but the original lender will agree to accept less than what the balance is actually worth.
There are two common kinds of hardship letters. The first kind is one that is based on medical or legal reasons. It may be because of a loss of employment or a serious illness, such as cancer.
People in this situation usually find themselves unable to pay their medical bills. Sometimes, the bills can be excessive. Then, they find themselves in a similar situation to those in bankruptcy.
The second kind of letter may be because of a death in the family or a move and there are no other repayment options. The person will have to move back in with their parents. They will not be able to afford a mortgage, car payment, or even rent a new home.
No matter the reasons, there are ways to get out of debt when certain situations occur. The best advice you can receive is to be aware of the different possibilities so that you can figure out how to approach them. Write your loan officer in your lender’s system and have them verify your situation before they file a claim.