Sample 401K Hardship Letter by zrg87525

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									             SAMPLE CLIENT HARDSHIP LETTER –                             FOR CONTENT
                                   THIS IS AN EXAMPLE ONLY.



(must do one for each lender)


Dear Sir or Madam,

We are writing this letter to explain our current financial and life situation in which we find ourselves. It
is embarrassing, frustrating and at times completely hopeless. We hope you can help us.

Recently, I (Monica) was approached by my employer (based in NYC) to accept a limited severance
package to take effect on December 31st, 2006 which truly poses financial hardship and life uncertainty.

This latest round of bad news for our family helps to explain our current situation and how we got into
the financial mess. In early 2002 just a few months after 9/11 and while employed as the Executive
Assistant to the President of a cable company (making a base salary with a weekly guarantee of 15-20
hours at time and a half), my company decided to re-structure and I became a salaried employee with no
overtime at all. This change took effect immediately. My income had been cut by more than $35K per
year so I stopped contributing to my future savings and 401K to help make ends meet. Being the
primary provider of our family, the significant drop in earnings drastically hurt our income and ability to
remain on top of our bills. Soon thereafter, the transmission in our primary and most economical vehicle
died, plus we were in a lease program with our secondary vehicle. Thinking it would be better to own vs.
leasing, especially considering the mileage to and from work (from our home to work in NYC and NJ
was a round trip of 182 miles), we decided to finance a new truck and return the leased vehicle.

It was around this time that we learned our current mortgage company had failed to escrow enough taxes
and hit us with an additional $535.00 per month to make up for the deficiency. With all of our utilities,
car payments, the rise in our school and property taxes and outstanding income taxes, we found it very
hard to maintain our mortgage payments. We got behind on our mortgage and found it near impossible
to catch up.

We decided to refinance again and at least pay off the 2nd mortgage (which the interest rate was 19.9%)
and include a few credit cards, we were advised by that mortgage company not to escrow for our school
and property taxes within the agreement and that the closing costs (over $17K) would be tax deductible.
We later learned they were not deductible! We thought we were making a good choice but were led
astray once again.

Living with the daily fear and stress that if anything were to go wrong over and above our extremely
tight budget / limited funds, we prayed we could get out of our financial hole. Just when we thought we
were close to being even with our bills, mortgage and all of the rest of our debt, we had a family relative
die. My husband’s father passed away and he was the only child capable of taking care of the expenses.
Another $7K in bills. We then soon found out I needed medical treatment for an unknown blood
disorder and then our other parent was in need of medical attention. With fuel costs, cost of living and
commuter expenses (over $100 a week in fuel) constantly rising we feel behind again.

Feeling desperate and under the advice of a local attorney, we filed for bankruptcy thinking it would
help our situation. A stretch of bad times with no help or assistance and limited financial knowledge
proved to be our downfall. In addition, seeing the situation we were in, we tried to sell the home using a
realtor. We had our home listed for over a year and had one offer, even after lowering our initial offer 4
different times. We were told time and time again that our home was overpriced and with the major
changes needed to our lot (tree and boulder removal, walkway needed, grading) needed to be improved,
it would not sell at the price we needed it to sell to pay off our mortgage.

This is not the lifestyle or the plan we had for ourselves and future family when we moved into what we
thought would be our dream home. Our credit is at an all time low. Our morale is shattered. We’re trying
to fix up old cars just to get to work, we have no savings and are literally living paycheck to paycheck.
As I mentioned earlier, I was informed by my employer that there’s something going on with my current
company, meaning changes and uncertainty with my job within the company. My last day will probably
be December 31, 2006. With this happening and with all of the hardships we have faced, we are asking
that you please consider our situation.

Your consideration is greatly appreciated.




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