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How To Use A Letter Of Hardship For Debt Settlement

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Getting out of debt is never an easy task, but there are options. If you are having trouble paying the minimum payments on your credit cards, now is a good time to look into your options. One of the ideas you could consider using is debt settlement. While it is easier to hire a company to settle your debts for you, you may want to try handling this yourself, and the first step to do this is write a letter of hardship to mail to your creditors.

What is a letter of hardship?

A letter of hardship is designed to inform creditors that you are struggling to pay your bills. It lets them know why you are struggling with your finances, and it asks creditors to consider changing the terms of the debts.

When you complete the letter, you can send it to each of your creditors, and you may want to do this through certified mail so you can be certain that they received it.

What should the letter include?

This letter should have two main components:

  1. An explanation of your hardship – In most cases, a hardship is something that occurs from a major change or issue in life. This could be a loss of job or income, a divorce, or anything else that caused you to get behind on your bills.
  2. A proposal – The proposal aspect of the letter should clearly state what you are offering to the creditors. You could ask for a reduction in your interest rate, or you could ask the creditors to remove late fees from your balance. You could also ask for a debt settlement, which means you will pay less than what you owe on the account. If the creditors agree to this, they will forgive the remainder of the account once you follow through with the payment arrangement that was agreed upon.

If you decide to ask for a debt settlement, begin by offering to pay 15% to 25% of the balance owed. They may not agree to this, but they might give you a counteroffer. It's always better to start low because this will give you some room to negotiate.

When you write this letter, be honest, clear, and kind and make sure it gives the creditors a good view of your financial state. If you send the letters and cannot work out any arrangements on your own, hire a company that offers debt settlement services to help you (such as Vine & Williams Debt Management).