Facing financial hardship | USAGov (2024)

FAQs

How do I explain my financial hardship? ›

In a straightforward manner, explain what caused your current financial struggles, whether it is a job loss, divorce, medical emergency or another unexpected hardship. Highlight how you're being proactive about your financial situation.

The IRS defines financial hardship as “unable to pay his or her reasonable basic living expenses.” If you owe more than $10,000, you will need to fill out a form detailing your assets, debts, income, and living expenses. If you are sick or disabled, you will need proof from healthcare providers or caseworkers.

Gently let them know that you care about them, and want to help. Listen and be curious about their experience. Give them space to share if they choose to. You can ask open questions such as 'how are you feeling?

This letter should explain your current financial situation and why you're unable to make payments. It should provide specific details about the hardship, such as when it began, how it was caused and how long it may continue.

Income Loss/Reduction

Acceptable Documentation. Lost Employment. • Unemployment Compensation Statement. (Note: this satisfies the proof of income requirement as well.) • Termination/Furlough letter from Employer.

Lenders may ask you for evidence of your hardship, like a doctor's certificate or termination notice. Lenders may also ask for bank statements and evidence of income. They may also ask for a money plan or an income and expenses form. A free financial counsellor can help.

“I'm writing to you because I was unable to work for several months due to an injury. During this time, our emergency savings were exhausted by medical bills and we fell behind on our debts.

Understanding 401(k) Hardship Withdrawals

Immediate and heavy expenses can include the following: Certain expenses to repair casualty losses to a principal residence (such as losses from fires, earthquakes, or floods) Expenses to prevent being foreclosed on or evicted.

You could also say, “My finances are tight" or, "I'm on a tight budget.” Even saying something simple like, “I'm not sure I can afford it” sounds so much better than saying, “I don't have money.”

You are the God who provides all my needs according to your riches in Glory. I come to You as I am struggling financially, asking for your provision. Remove my fear, doubt, and unbelief. Fill me with Your peace and confidence in the promise of your care for me in time of need.

What not to put in a hardship letter? ›

Here are some examples of things you shouldn't say in the letter: Don't say that your situation is your lender's fault or that their employees are jerks. Don't state that things will likely turn around for you.

Everyone has experienced setbacks, hardships, and misfortune. Whether it's not getting a job, experiencing a breakup, losing a loved one, or facing a health complication, adversity is something no one can avoid.

Also called economic burden, economic hardship, financial burden, financial distress, financial stress, and financial toxicity.

Financial difficulty is where a borrower can't make repayments to existing credit, or they can only do so with difficulty because a change in their circ*mstances took place after the credit was provided.