What is a financial hardship? (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.

You are in financial hardship if you have difficulty paying your bills and repayments on your loans and debts when they are due. Under credit law you have rights when you are in financial hardship . This page explains your rights and obligations under the law.

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.

I am writing this letter to request assistance with my personal loan during a time of financial hardship. Approximately two weeks ago, I was let go from my job due to company-wide layoffs. As a result, I have been unable to continue making regular payments on my loan.

The IRS may agree that you have a financial hardship (economic hardship) if you can show that you cannot pay or can barely pay your basic living expenses. For the IRS to determine you are in a hardship situation, the IRS will use its collection financial standards to determine allowable basic living expenses.

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.

You may face financial hardship for a number of reasons. Medical emergencies, a car accident, or losing a job are some examples of situations in which it might become difficult to meet your debt repayments or even cover the basic cost of living.

When you write the hardship letter, don't include anything that would hurt your situation. 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.

Hardship Examples

Illness or injury. Change of employment status. Job Loss or loss of income. Natural disasters. Divorce.

What is another way to say financial hardship? ›

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

Financial hardship means an inability to meet basic living expenses for goods and services necessary for the survival of the debtor and his or her spouse and dependents.

A financial hardship is an unplanned, unforeseen financial expense that is beyond the employee's means to manage. It is a life changing event that alters the course of someone's day-to-day and is not solely due to loss of employment.

Hardship applies to a circ*mstance in which excessive and painful effort of some kind is required, as enduring acute discomfort from cold, or battling over rough terrain. Privation has particular reference to lack of food, clothing, and other necessities or comforts.

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.