What is Considered Financial Hardship?

Posted by Keller Home Solutions in Avoiding Foreclosure, Financial Hardship | 0 comments

If you are having trouble making ends meet, you might be able to ask your lender or credit card companies for assistance. Oftentimes, writing a hardship letter to explain the details of your situation can help your case.

What constitutes a hardship?

How do you know if you are experiencing financial hardship? The IRS defines “hardship” as when you are not able to pay for allowable living expenses.

“Allowable living expenses” are the day-to-day things you need to take care of your family. These expenses include:

  1. Food
  2. Housekeeping supplies
  3. Apparel and services
  4. Personal care products and services
  5. Miscellaneous

Another way to look at it: If what you owe each month is more than what you earn, you are experiencing financial hardship.

There are many different situations that can lead to financial hardship —  

Losing your job, work cutbacks, or reduction in pay

These are the most common reasons for financial hardship. If you or a contributing member of your household loses their job, your finances can take a big hit. If you work an hourly job and your hours have been significantly cut, this can also qualify. Or, perhaps you got a new job, but it pays far less than your previous job. Even though you are employed, this can be treated as hardship.

If you are a business owner or are self-employed, a decline in business and revenue is also considered financial hardship.

Divorce or separation

Besides the legal fees, taking over sole responsibility for mortgage payments and other household expenses can be overwhelming with only one income. Add shared debt and child support, and the expenses can stack up quickly.

Illness or injury

Medical bills associated with serious conditions such as cancer or a heart attack, or even the slower onset of symptoms of Alzheimer’s disease or diabetes can take a significant toll on finances.


Funeral costs due to a death in the family can put a serious strain on finances.


Natural disasters and acts of God, as well as fires or car accidents can cause thousands of dollars of damage.

Legal problems

If you or a family member is involved in a costly litigation or is incarcerated, it can have a devastating effect on your finances.

If you have exhausted all other options to get out of hardship, you may look at selling your home and downsizing to a cheaper living situation to alleviate some of the financial stress. Keller Home Solutions is an Austin-based investor with local experience. We are willing to offer a fair market price on your home, all in cash and closing within days instead of weeks.

Contact us for a consultation today.

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