A hardship letter is an explanation you send to the lender: why you defaulted, what you've done to correct it and what workout plan you'd like to use. A foreclosure hardship letter should include the following information:

1. Your identification: name, address and account number.

2. The hardship you're going through (i.e. loss of your job, medical expenses) and why you're having the hardship (i.e. laid off, divorce, unexpected illness).

3. The exact dates you encountered the hardship (i.e. the day you were laid off, got sick, etc).

4. An outline of your income and expenses. Let the lender know if you're expecting your income to change, and if you have any money you can pay toward the past due amount.

5. The workout plan you want to talk about, and why you think it would work.

6. Information on how and when you (or your negotiator) can be contacted.

7. What, if anything, that you've done to try to correct the delinquency (i.e. tried to get a title loan, cut back on expenses, etc).

You should also attach proof of your income and expenses – anything that will prove you are actually in a hardship situation.

Reasons foreclosure hardship might be accepted:

• You lost your job

• You have medical issues that stop you from keeping a job

• You received a cut in pay

• You have a low-income single parent household with no child support

• Your spouse died

• You recently suffered a disaster (Katrina, for example)

Reasons foreclosure hardship might not be accepted:

• You can't pay the mortgage because you're a student

• You're currently going through a divorce

• Your spouse wants to declare bankruptcy

Generally, you'll have to have a proper explanation of why you're behind and can't pay to be considered for a workout plan. Make sure your explanation is clear, concise and true, and that it doesn't criticize the lender. Also, make sure you know the available workout plans. Three are listed below:

Forbearance – This is best when you know that your situation will improve within a short period. With forbearance, the lender decides to wait instead of filing for foreclosure, and works with you to make an affordable repayment plan.

Loan modification – A loan modification is just like it sounds. The lender agrees to modify your loan to a more manageable rate. If the hardship is current, this may not be possible.

Refinance – This is best if the hardship is over and you're able to make the current loan payments, but not the back payments. Refinancing adds your back payments to the total loan amount, and the lender re-amortizes the loan.

These are just some of the workout plans available to keep from going through foreclosure. As you can see just from these few, they vary, and some may be better than others for your current situation. Look through the different options carefully. Avoid foreclosure – educate yourself!