Many people are no stranger to financial troubles. If you are in financial hardship, you can qualify for a lot of assistance such as suspended payments on your credit cards, but if you don't really know what financial hardship is, you may not be aware that real help is out there.
Identification
Financial hardship involves a severe lack of finances due to life circumstances. There are two reasons why a person may want to prove he has financial hardship. One is to receive help with loans or other debts. Another reason is to withdraw money early from a 401k plan.
Types
There are two types of definitions for the term financial hardship. The IRS has a specific definition supported by regulations so a person can withdraw from their 401k plan. The general definition of hardship is often used by credit card companies, student loan companies or other debtors to allow a person to get a break from making payments on a debt.
The IRS's Definition
The IRS defines financial hardship as an immediate and heavy financial need. The IRS deems certain expenses as immediate and heavy. They include certain medical expenses, costs that are related to the purchase of a home, tuition and other educational fees, payments needed to stop eviction, and burial or other funeral costs.
The General Definition
Without using the IRS's more formal definition, hardship is generally defined as a situation where a debtor is not able to afford repayments on a debt. Usually illness, unemployment or another cause is a reason for that hardship. People who suffer from general hardship may want to seek a different repayment arrangement until they get back on their feet. Many people write financial hardship letters to creditors explaining their financial problems and requesting some sort of arrangement, according to Writing Help Central.
Prevention/Solution
While some things can catch you by surprise, strong financial planning can help you avoid financial hardships. Consider getting rid of unnecessary debts that are eating up finances you could be putting away in a savings account. A savings account will help you to prepare for emergencies that would otherwise put you in a financial strain.
0 comments:
Post a Comment