It is not a lot of fun to write a hardship letter. In fact, it can be depressing. Many people may not know how bad their lives have become until they reach a point of writing a hardship letter. Sometimes seeing all those awful things in writing is startling and some people start crying. However, do not turn and start talking about how your life will improve. Do not share your hopes and dreams for the future with the bank. It's none of the bank's business.

If there is hope on the horizon, if there is a chance for recovery and for you to become whole again, then the bank will not hesitate to grab a knife and plunge it into your heart. If your bank senses anything that shows that you might have the financial means at some point in the future to repay part of that debt, then the bank will jump on it like hot fudge on a sundae.

The bank doesn't care about you or protecting your precious credit rating. So do everything you can to clue them into the harsh reality of your situation. Let them know that you have thought of bankruptcy. Most people think of bankruptcy for just a second and then try to shove the thought into the back of their head. But let your bank know that you have thought about bankruptcy. After all there is nothing that scares them more than bankruptcy. They know it allows you to walk away from your debt. It also makes them much more willing to negotiate with you. If you are on the brink of bankruptcy, then you've got a story the bank can listen to.

Do not be afraid to be truthful and tell that story.

You should reveal every little thing just to show that your situation is real and that you cannot afford to make your mortgage payment. Use numbers and percentages to explain the loss your of income or negative cash flow. For example, instead of saying, "I'm borrowing money to make the mortgage payments," disclose the dollar amount and source of that debt. A good example would be, "I've borrowed $10,000 against my VISA card to make my payments over the past six months, and I have tapped my cards to the maximum."

You need to paint the worst picture that you honestly can. If your car needs maintenance or repair, if the cat has cancer and your vet bills are increasing, if your kids are starving to death on peanut butter sandwiches, and your fingernails are worn from quick scrubbing other people's floors for pennies a day, then put it into your hardship letter. Use simple words that anyone can understand. The people reading these hardship letters are real people. If they don't feel sorry for you by the time they have finished reading, then maybe you need to re-write it. 

When I interview sellers who want to short sale in my area, I ask them to describe their hardship. Agents who do a lot of short sales can sometimes become a little insensitive because we are focused on the statistics. For instance, when a seller says she is getting divorced, it's possible that I may not show a lot of emotion. Then I realize how that comes across, which is not at all in the way I intended it. Trying to do a short sale or loan mod because of relationship difficulties is acceptable to most bank guidelines.

It's not good news that the you and your spouse are splitting up. But, it is important for your lender to know. In your hardship letter, you want to explain  three things:

1. How you got into your present situation - If for example you have missed mortgage payments state what caused this to happen.  Was it due to job loss? Medical or some kind of family emergency?  You need to be sure that the dates of the missed payments correspond to the circumstance that caused you to not make your mortgage payments.  Use dates to references the times in which hardships happened to you.
   
2. What you have done to try to get out this situation – state the activities that you have undertaken to try and change your current situation.
   
3. Why this situation is permanent and nothing you can do will change it.
   

Try to incorporate those three things into your hardship letter. It will make your situation look more sympathetic.