Sample Hardship Letter
To Restructure Debt


Financial hardship letters are normally written to major creditors when the debtor is experiencing serious financial difficulty and is in need of some sort of financial remedy. The two most common situations that require financial hardship letters involve mortgage debt or credit card debt. The real-life example hardship letter below seeks to restructure and consolidate existing credit card debt at a significantly lower interest rate.

(print Financial Hardship Letter on personal stationery)

417 Biscayne Road
Santa Cruz, CA 95060

August 12, 20xx

Ms. Dorothy Gomez
Manager, Credit Services
Great Bend Savings Inc.
2795 Delaware Avenue, Suite 300
Santa Cruz, CA 95060


Dear Ms. Gomez:

Re: Request For Debt Consolidation and Restructuring - Marion Walsh

I am a long time customer of your bank, having opened my first account at the Santa Cruz branch more than 20 years ago. The purpose of this letter is to request your kind assistance in helping me get through a period of temporary financial hardship.

Five years ago I lost my job as an Account Executive in the pharmaceutical industry due to downsizing caused by poor economic conditions in the marketplace. After a short period looking for a similar job with no success I decided to do something I had always dreamed about and start my own business. Accordingly, in June 20xx I started my current online business, pharma-sales-tools.net. That service is based on my own industry research and knowledge that pharmaceutical sales representatives were in need of a host of sales tools and services, especially a central sales leads database.

When I started the business I had personal savings of $17,000 and a cashable pension fund of $22,500, which together provided the critical funding for setting up my initial online business model. However, it took more than two years before the business began generating sufficient income to cover both my business and personal expenses. During that period I had to rely on a number of consumer and business credit cards that I had previously qualified for due to my excellent credit record. Over time, the balances on those cards grew to the point where the total outstanding amounts now exceed $80,000. With interest rates on those cards averaging almost 20% I am having to pay more than $900 per month just to cover the interest costs alone. This is a particular hardship for me since I already pay $1,200 per month to cover my elderly Mother's living and medical expenses.

The good news is that, after the initial start-up period, my business is beginning to take off and I expect to gross well over $150K this year with total direct costs of about $40K. (Low costs because I work out of my home). I have enclosed a cash flow analysis that covers the business building period as well as financial forecasts for the next three years. As you will see when you review the statements, my largest business expense by far is the cost of interest related to these consumer credit loans. That, coupled with the costs of supporting my Mother (invoices attached) leave me in a constant state of "treading water" since I cannot afford to spend the additional money required to grow my business.

Now that I have proven on my own that my business idea works and is viable and growing into the future, I respectfully request that you review my credit card debt situation to see if any consolidation and/or restructuring is possible. Although I took all of the risks myself in the early business start-up years and did not even apply for a business seed loan from your bank I am wondering if, through loan consolidation, you would now consider reducing my overall interest rate to the 7% to 9% range which is what you currently charge for your "Small Business Start-Up Loans". This would effectively cut my interest payments in half and thus allow me to continue to grow the business while also supporting my Mother.

I very much appreciate your kind consideration in this matter and look forward to hearing from you. Please feel free to contact me at 831-421-7754 if you have any questions.

Yours sincerely,


Marion Walsh

attach: Financial Analysis Statements - 20xx - 20xx
           Green Valley Lodge - Monthly Expenses - Susan Walsh


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