Good communication with your creditors can mean reduced interest rates and fees. To remain in good standing, inform your creditors when you are experiencing financial hardship. A simple letter of explanation can help you avoid collection calls, and sometimes late fees, when you fall behind in paying on your accounts.
How Much You Can Pay
Creditors are generally detail oriented. Stating that you are having financial trouble is not enough information. Always get specific. Give creditors a date when you hope to regain financial stability. Explain how much you are able to pay on your account each month. If you are not currently able to pay anything, state specifically when you expect to make your next payment.
Tell Your Story
Use a conversational tone when writing your hardship letter. Reveal personal details that help the reader understand and empathize with your circumstances. While a hardship letter is intended to inform the lender of your circumstances, it also provides the opportunity for the creditor to connect with your personal story.
Tone
Use an appropriate tone in your cover letter. Although you want to set a positive tone, the purpose of your letter also is to show your desire to take responsibility for the current circumstances. A statement of regret for not meeting your financial obligations shows that you are concerned about keeping a good relationship.
Gratitude
Creditors are not obligated to bend the rules for you simple because you are experiencing hardship. Keep this fact in mind while writing your letter. Demonstrate gratitude whenever possible by thanking the creditor for reading and considering your request. If your prior relationship with the creditor was positive, thank the lender for the quality experience you have had thus far.
Action Steps
Give the creditor an action item. For example, if you are making less than the minimum payment due on a credit card, you can request that the late fee be removed. Always explain to the credit how you want the situation handled. Your request will not always be granted, but it opens the door to negotiation.
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