In your normal life, you will be faced with situations where you will be late in making payments for your utilities, home mortgage, rental fees and credit card bills, to name a few debts. Instead of ignoring them, however, you should take the necessary measures to protect your credit rating, even when you cannot pay your late bills, by writing a letter to the concerned company.

You might even be provided with a longer grace period, which will not adversely affect your credit rating. So, better get your pen and paper and write that late payment explanation letter now.

Contents of the Letter

To make your letter as convincing as possible, you should ensure that it contains the following contents:

• Reasons for your tardiness in payment - You should not make flimsy excuses because the company have heard and seen it all and, hence, will see through them. Instead, be as honest as you possibly can without going into hysterics, passing the blame and muddying up the waters. Did you lose your job? Say so. Did you lose your unemployment benefits? Say so.
• Plans for resolving your debts - You should provide your concrete plans for paying off your debts in the future especially where the company is concerned. You need neither be too personal nor too detailed with your plans. Just as long as you can reassure the company that you have every intention of paying them, then it is often sufficient for the moment. Again, tell them the truth as far as you are concerned. For example, you can tell them that you are planning to sell some of your assets in order to generate the funds to pay off your debts.
• Thanks for their kind consideration - You should also thank the company for the favor it will be doing for you. Keep in mind that you are being provided with a favor and, hence, you should adopt a grateful and respectful tone.

No matter the contents of your letter, keep it short, simple and sweet. Also, you should send your letter via certified mail. And try to include evidences of your efforts to repay all your debts as well as your financial hardships at present. Think of it as compelling evidence.

Sample Letter

(Date)
(Addressee)
(Late Account Number)

I am writing in relation to my inability at present to pay off my debts with your company due to financial hardships. Unfortunately, I was part of the downsizing plans of my former company, XYZ Corporation, last December of 2008. Although I have diligently searched for a new job, I am still unable to do so because of the recession. As such, I have been remiss in my duty to pay my bills.

However, rest assured that I have every intention to pay back all of my outstanding debts with your company as soon as I am able to find a new job, sell some of my assets and avail of assistance from well-off family and friends. Until this unfortunate event, I have been a good debtor, which I hope will be in my favor in this request for loan forbearance.

Please find attached proof of my financial hardships at present. Thank you for this and past favors. I hope to hear from your office soon.

Sincerely,

(Signature/Date)