how to write a hardship letter for credit card settlement

• Customer Service. The consumer can call the customer service desk of the credit card company and ask if there are any procedures for hardship cases.
• Creditor Is Not Obligated To Help! The letter is the consumer’s chance to explain his or her financial situation. ...
• Use Short Paragraphs. The letter should be written short paragraphs. The first paragraph should state the request and give a summary of the financial hardships.
• Sample 1 – Hardship Letter For Credit Card Debt. This letter is a formal request to reduce my monthly payments on the above credit card account. ...
• Sample 2 – Hardship Letter For Credit Card Debt. I am writing regarding the above listed credit card. ...
• Sample 3 – Hardship Letter For Credit Card Debt. My name is [YOUR NAME] and I am writing in regards to account [NUMBER] for which I owe [AMOUNT]. ...

Full Answer

Should you write a hardship letter for debt settlement?

However, before you file for this, you may want to consider writing a hardship letter debt settlement instead. Typically, this letter is sent for real estate debt, but it can actually be used for any kind of debt. Experiencing serious financial difficulty is highly distressing and you may be feeling overwhelmed.

How do you write a credit card hardship letter?

There are several things to consider when writing a credit card hardship letter, and they include: Your first letter should offer to pay anywhere from 15-25% of the total balance outstanding on your credit card debt.

How to write a credit card debt settlement offer letter?

Make the offer and be sure to make it a strong one and the company will more than likely be interested. Here is a sample of a credit card debt settlement offer letter. I am writing about an account that is in collection with your company. The account number on my statement is [189478593].

How to write a credit card settlement letter to end harassment?

By writing a Credit Card Settlement Letter, you can easily negotiate a settlement to end the embarrassing creditor harassment. Before beginning this letter, make sure you know what you can pay and what you can’t. Don’t make promises that you can’t keep, this will make the company less likely to work with you in the future.

How do I write a letter to settle a credit card?

Dear Sir/Madam, I'm writing this letter in regards to the amount of debt on the account number stated above. As a result of financial hardship, I am unable to pay back the amount in full. [Here, take the time to explain your hardship so the creditor has a better picture of what's going on].

How do you write a successful hardship letter?

How to Write an Effective Hardship LetterPart 1: Explain what happened and why you are applying. ... Part 2: Specifically illustrate the time and severity of the hardship. ... Part 3: Back up the reasons traditional remedies won't work. ... Part 4: Detail why you are stable enough to succeed with a modification.More items...•

How do you prove financial hardship?

They include:Mortgage loan documents or your lease agreement.Copies of bills for monthly expenses such as utilities, telephone, transportation, insurance and child care.A copy of the court order for child support or spousal support payments.Copies of hospital and doctor bills.

What is a reasonable settlement offer for credit card debt?

When you're negotiating with a creditor, try to settle your debt for 50% or less, which is a realistic goal based on creditors' history with debt settlement. If you owe $3,000, shoot for a settlement of up to $1,500.

What are examples of hardship?

Some examples of events that a lender may consider to be a financial hardship include:Layoff or reduction in pay.New or worsening disability.Serious injury.Serious illness.Divorce or legal separation.Death.Incarceration.Military deployment or Permanent Change of Station orders.More items...•

What should a hardship letter contain?

A "hardship letter" is a letter that you write to your lender explaining the circumstances of your hardship. The letter should give the lender a clear picture of your current financial situation and explain what led to your financial difficulties. The hardship letter is a normal part of the loss mitigation process.

What is hardship evidence?

Letters from medical professionals as evidence of physical and/or emotional conditions that will lead to extreme hardship. Copies of tax returns and/or pay statements as evidence of income. Copies of statements showing any debts that need to be settled in the United States.

What is classed as severe financial hardship?

Definition. A single person is in severe financial hardship if: their readily available funds are equal to or less than the specified limit (as set out below), AND. they CANNOT reasonably be expected to sell or borrow against assets (1.1.

Will debt collectors settle for 30%?

Lenders typically agree to a debt settlement of between 30% and 80%. Several factors may influence this amount, such as the debt holder's financial situation and available cash on hand.

How can I get out of debt without paying?

Ask for a raise at work or move to a higher-paying job, if you can. Get a side-hustle. Start to sell valuable things, like furniture or expensive jewelry, to cover the outstanding debt. Ask for assistance: Contact your lenders and creditors and ask about lowering your monthly payment, interest rate or both.

How do you negotiate a settlement?

Identify, gather and produce the most important information early. Settlement negotiations are most effective at the proverbial sweet spot, when each side has the information it believes it needs to make a judgment about settlement but before discovery expenses allow the sunk costs mentality to take hold.

How do you write a loan modification hardship letter that gets results?

COVID-19: How to Write a Mortgage Loan Modification Request...Keep your letter to a single page.Include income and asset documentation such as pay stubs, bank statements, and other relevant paperwork.Stick to the facts. ... Let the lender know the specific concession you are requesting.

What should be in a hardship letter for a loan modification?

What is a Loan Modification Hardship Letter?Illness.Medical Bills.Job Loss.Divorce.Death of spouse.Military Duty.Reduced Income.Natural or human caused Property Damage.

What is a hardship supporting document?

Financial information or documentation that substantiates the employee's immediate and heavy financial need. This may include insurance bills, escrow paperwork, funeral expenses, bank statements, etc.

How do you write a hardship letter to transfer?

I am writing this letter to request a job transfer closer to where I currently reside (San Antonio, TX) due to a set of unfortunate circumstances I experienced in the recent past. Three months ago, my youngest daughter, six-year-old Natalie, was diagnosed with diabetes.

What happens if you write a hardship letter to a credit card company?

In many cases, if the consumer clearly and politely explains their situation to the credit card company with a hardship letter, there is a good chance the credit card company will go easier on its debt collection efforts and may even reduce the amount the consumer needs to pay.

How to write a letter to a financial hardship?

The letter should be written in short paragraphs. The first paragraph should state the request and give a summary of the financial hardships .

How to write a hardship letter?

Some tips for writing a hardship letter: 1 The letter should be no longer than one page 2 The letter should clearly state that the consumer is willing to resolve the debt 3 The letter should state the facts of the case clearly and objectively 4 Any supporting documentation such as medical records or proof of loss of job should be included with the letter 5 The letter should clearly propose a solution that the consumer faithfully agrees to follow 6 The letter should thank the creditor for considering the request 7 The letter should not be written in an overly dramatic, exaggerated tone 8 The letter should not give promises that the consumer cannot keep 9 The letter should not threaten the creditor with bankruptcy if the consumer does not receive help

What can a credit card company do to help a consumer?

It can suspend late fees, lower interest rates, allow reduced payments for a specified period of time and suspend activity on the credit card while the consumer pays down the debt.

What documents should be included in a hardship letter for credit card debt?

A list of enclosed documents such as death certificate, unemployment notices or medical records should be given after the signature. Below are sample hardship letters for credit card debt. It is written in formal business letter style and should be sent by certified mail with a return requested.

Why is my pay reduced?

Decreased pay because of less working hours. Military duty. Incarceration. If the financial hardship will last for many months or a year, the consumer should consult a debt management counselor for help in how to handle his or her finances during a hard time.

What should be included in the concluding paragraph of a creditor's contract?

A list of enclosed documents such as death certificate, unemployment notices or medical records should be given after the signature.

What is a hardship letter?

Below you will find examples of hardship letters. They can be used as a starting point when dealing with a lender. While a hardship letter will not magically get you out of debt, it is a great tool to use to begin the process. There are several things to consider when writing a credit card hardship letter, and they include:

What to write in a letter to a friend?

Be polite, considerate, and professional in the letter.

What happens if a credit card debt is not paid?

If the payment is not made for the outstanding credit card debt, then the agreement will become null and void.

What documents do you need to send to a bank?

Send them copies of financial documents, including pay stub (or unemployment info), bank statements, investments, copies of expenses such as utility bills, mortgage payments, etc. They will need all of this documentation, and maybe more.

What should be replaced with information on your personal situation?

Note, all text in italics should be replaced with information on your personal situation.

What to do if you can't keep a settlement?

If you make promises that you can’t keep, you may find yourself in far greater financial difficulty later on. Be honest, be clear, and show that you are willing to come to a mutual understanding.

Can you write a hardship letter for real estate debt?

However, before you file for this, you may want to consider writing a hardship letter debt settlement instead. Typically, this letter is sent for real estate debt, but it can actually be used for any kind of debt.

How to send a letter to a credit card company?

Address the letter to the proper office. Find out which office of the credit card company handles settlement offers. You can usually discover this by looking up the company online or calling the customer-service number on the back of the card itself. When you reach someone at the company, say that you would like to make an offer to settle your debt, and ask what address you should use for sending a letter.

How to settle credit card debt?

Decide what you can offer to pay. Before trying to settle your credit card debt, you need to decide what you can afford. Review all of your outstanding debts, and compare these to your regular income and any other funds you have available.

What to do if you owe more on credit card?

If you owe more on a credit card than you can afford to pay, you may wish to negotiate a settlement with the card company. In a settlement you agree to pay some lesser amount, and the company agrees to accept that amount. You both avoid the trouble and expense of going to court, and you can protect your credit rating at the same time.

What does "in full settlement" mean?

An offer of this type could say something like, “I am able to make an immediate payment of $4,000 in full settlement of my outstanding credit card debt.” Be sure to use the phrase “in full settlement,” so it is clear that you mean this as a full and final payment and not as part of a payment plan.

What happens if you pay less than the amount due?

If you pay anything less than the full amount due, your credit score is likely to drop. However, you can try to minimize the damage by modifying the way the company reports the settlement. Ask them to report your account as "paid.". This is best for you.

How to explain why you need to settle your debt?

Explain your predicament. Avoid getting emotional about the problems in your life, but you should explain your reason for needing to settle your debt. It will help your case if you can refer to a particular cause, such as an accident, divorce, or something else that is not likely to repeat. If you've simply overspent, the company will be less inclined to settle, because they have no assurance that your spending habits will change in the future.

How long does it take to respond to a letter from a company?

Provide a date for a response. At the end of your letter, ask the company to respond to you by a particular date. You should allow at least two weeks for the response. However, even if you do not receive a reply by that date, do not assume that your offer has been rejected.

What is hardship letter?

A hardship letter is the first step to letting the credit card company know that things are bad. ​. It can stop creditor harassing phone calls and can put the account back on track at the credit bureau.

What to write in a letter to a person who lost their job?

The first paragraph needs to have the reason for the letter. Ask for help and say why help is needed. If a person in the house lost their job, it may have a financial impact on the ability to pay this credit card bill. State the reasons why things are falling behind. ​​

What is the easiest debt to file for bankruptcy?

Easiest Debt to File Bankruptcy On? ​. Credit card companies are the easiest debt to file bankruptcy on, which is why they are usually more than willing to work with someone who is willing to pay anything. A hardship letter is the first step to letting the credit card company know that things are bad. ​.

What is a letter to reduce my debt?

This letter is to formally request a reduction in payments on my debt for the next six months. I request to pay AMOUNT starting on DATE and beginning the normal payments on DATE. I have every intention of paying my debt, but am not able to make the usual payments at this time.

How to start a letter for a business?

Start the letter with proper business format. Make sure to have the name and address of the company with the date at the top left hand side. It is acceptable to put a reason line and place the credit card number in it. The first paragraph needs to have the reason for the letter. Ask for help and say why help is needed.

Do credit card companies work with people?

Credit card companies are often willing to work with people who are having a hard time. After all, some money coming in is better than no money at all. This is not an uncommon request or something they don’t deal with on a daily basis.

Do credit card companies suspend late fees?

Usually, credit card companies will suspend late fees, lower interest rates and do many other things in an effort to help. Oftentimes, they will want to suspend card activity and keep the account open while the person is paying the debt. This can be beneficial to someone who is having a hard time paying their bills.

What is a hardship letter to creditor?

A Hardship Letter to Creditor is written by a borrower to his particular creditor describing the change in his current financial situation. When the borrower requests for any financial assistance or requests for an alternative payment method then the creditor requires a letter of hardship.

What should a letter of credit include?

The letter should also include the cause of the financial hardship faced by the borrower and the current financial situation because of which the borrower is unable to pay the debt. Once the creditor has completely understood the borrower’s current financial situation, he will approve of an alternative payment method.

What happens if you have old debt?

If the debts are old, creditors are happy to accept any offer used for payment.

What happens when you fall behind on credit card payments?

Managing debt can be difficult, but when someone falls behind in their credit card payments, it can be a nightmare. Creditors are relentless at attempting to collect debts. They will call all hours of the day and night.

What happens if a debt escalates to 90 days late?

Once a debt escalates to the 90 to 120 day late range, the company will often send the debt to a third party collection agency.

What happens if an account sits in collection?

The longer an account sits in collection, the more money is owed. They will tack on interest and other miscellaneous fees that are difficult to pay.

Can you negotiate a settlement with a credit card company?

There is no need to enter into such an agreement; you can do it for yourself. By writing a Credit Card Settlement Letter, you can easily negotiate a settlement to end the embarrassing creditor harassment.

Can credit collection agencies settle past due accounts?

However, there is a way to avoid this nightmare and handle past due accounts without the embarrassment. Credit collection agencies know that people don’t have the money to pay off the absorbent fees, so they offer settlements.

What Is a Debt Settlement Letter?

If you’re unable or unsure about negotiating a debt settlement over the telephone, negotiating by letter is a reasonable option. It’s not much different negotiating with your creditor by telephone, but it might take longer. There are several ways to prepare a settlement letter, including hiring an attorney to write it for you or going online to download a template to use as a starting point. There are also several sample letters you can look at to get an idea of what your completed letter should look like.

What is the first step in a debt settlement?

The first step in a debt settlement negotiation with a bank, credit card company, or collection agency is to confirm the debt belongs to you. Some debts pass through multiple collection agencies once they leave the original creditor. During that time, mix-ups can occur or debts can become so old they are past the statute of limitations and legally uncollectible .

How does debt settlement work?

Luckily, there are many debt relief options. Debt settlement is one of the most advertised and for good reason. It’s often used for credit card debts and allows borrowers with unmanageable debt to pay off one or more debts for less than the full amount. The creditor then forgives the remaining debt. This may sound too good to be true, but it’s not. How well it works for you will depend on your financial situation and whether you choose to hire a debt settlement company to help you or do the debt settlement process yourself. This article will explain how to handle debt settlement on your own and how to write the best debt settlement letter possible.

How long do you have to be behind on your debt to get a creditor to accept your debt?

To increase your chances of getting a creditor to accept your debt, you need to be at least 90 days behind on your payments with that creditor. And during the negotiation process, you’ll need to continue not making any payments. This will hurt your credit score and the extra fees and interest may increase your overall debt. But it’s easier to convince a creditor that you can’t fully pay off your debt when you haven’t made any payments for several months. Remember, a creditor is willing to settle a debt for less than what you owe because they fear your financial situation is so uncertain that they won’t recover any money from you in the near future.

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How to reach out to your creditor?

Now it’s time to reach out to your creditor. You can do this by telephone or by letter. Either way, you’ll need to have some cash saved up beforehand. Most debts get settled after the borrower makes a one-time lump-sum payment of the outstanding debt. In other cases, you’ll need to pay two or three large payments over a short period of time instead. Creditors rarely agree to let borrowers use a payment plan with monthly payments to settle their debts.

How long does it take to settle a debt?

Another major advantage is that the DIY debt settlement process tends to be faster, perhaps six months or less. In contrast, using a debt settlement company can easily take several years. Not only does this extra time mean it takes longer to get debt relief, but that’s more time for your debt to accrue interest and penalties.