Bankruptcy means that the person declared bankrupt cannot repay their debts back. This may be due to any number of reasons. An insolvent person may wish to do business again, for this he or she requires credit. Usually, a person who has been bankrupt earlier finds it difficult to get credit from the market. For this reason, the person requesting credit has to a write a letter to a potential creditor explaining the causes of the unfavorable credit history.
The reasons may be due to health reasons, family problems etc. This letter is written to build the trust of the potential creditor. A bankruptcy letter may also be written to a previous creditor who has suffered a loss because of non-payment of dues because of the bankruptcy of the person. This is a way of salvaging one’s reputation in the market by showing that the bankruptcy was due to extenuating situations and not due to carelessness. This makes getting credit a little easier.
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Explanation of Bankruptcy Letter Writing Tips
- The tone of the letter is formal.
- The letter should disclose all the circumstances leading to bankruptcy.
- The letter should be clear and concise.
- It should be self explanatory and instil trust in the reader.
- After writing the letter, please check for grammatical and spelling mistakes.
Explanation of Bankruptcy Letter to Cousin Template
Use our free Explanation of Bankruptcy Letter to help you get started. If you need additional help or more examples check out some of the sample letters below.
From,
_____________
_____________
_____________ ( your address)
Date: _________________ (date of which letter is written)
To,
_____________
_____________
_____________ ( address of the person the letter is addressed to)
Subject: Explanation of Bankruptcy
Dear ____________ (name of the lender),
I am writing this letter to explain to you the reason for having filed for bankruptcy in _____________ year. __________________________________________________________ (reason for bankruptcy).
I have a __________________________________ (new job/business plan). For this I require a loan of _________________ (amount) for _________________ (time period). I have enclosed within my budget showing the financial stability of my plans.
Thank you to consider my loan application. I would be happy to answer any further questions that you may have regarding my plans.
Sincerely,
_____________.
Sample Letter
From,
Mr. Brian Jones.
Holy Grail Road,
West Hamilton,
Chicago.
Date: February 26, 2017.
To,
Ms. Abigail Mathew.
Green Park Builders,
West Coast Gulf,
Chicago.
Subject: Explanation of bankruptcy.
Dear Ms. Abigail Mathew,
I am writing this letter to explain to you the reason for having filed a bankruptcy in 2015. My wife had been diagnosed with breast cancer. As we had no one else to help take care of her, I had to quit my day job to be with her.
Due to the heavy expenses of the treatment, medicines, food bills etc. I had not been able to pay back the loan I had taken from you for a car. Even after selling most of our belongings we were unable to meet the costs and pay back the loans previously taken. Hence, as I saw no other option and had to resort to filing bankruptcy.
I am sorry for the inconvenience and hardship you may have suffered because of me.
Thanking you for your consideration.
Sincerely,
Brian Jones.
Email Format
In this day and age, one may submit an explanation of bankruptcy to a potential lender through email, which is faster and cheaper. The following is an email for an explanation of bankruptcy.
To: name@email.com
From: name@email.com
Subject: Explanation of Bankruptcy
Dear ____________ (name of the lender),
I am writing this letter to explain to you the reason for having filed for bankruptcy in _____________ year. __________________________________________________________ (reason for bankruptcy).
I have a __________________________________ (new job/business plan). For this I require a loan of _________________ (amount) for _________________ (time period). I have enclosed within my budget showing the financial stability of my plans.
Thank you to consider my loan application. I would be happy to answer any further questions that you may have regarding my plans.
Sincerely,
_____________.