Re: how to write a letter explaining why i filed for bankruptcy

Posted by Raymond on October 11, 2004 at 10:22:33:

In Reply to: how to write a letter explaining why i filed for bankruptcy Posted by machele on October 07, 2004 at 14:54:14:

When a credit explanation letter is requested, they're wanting to see the bankrutpcy was an isolated event, which you've recovered from, and it won't happen again.

Lenders would much rather hear the bankruptcy was caused by unforeseeable misfortunes that were beyond your control. The burden is still on you, however, to persuade the lender the misfortune is very unlikely to recur.

For example, the firm you've worked at for 15 years suddenly and without warning went out of business. If you now have a new position, you can make a case this is unlikely to happen to you again. A bankruptcy caused by a natural catastrophe or serious health problem is similar, provided you are persuasive in arguing they were one-time events. Be prepared to back up your story with documents or verifiable details.

The letter should be addressed to your Loan Officer (so it doesn't get misplaced). I'll provide an example letter below.

Your Name Address Line 1 Address Line 2 City, State Zip Code


Your Loan Officer's name Your Loan Officer's Company Address Line City, State Zip Code

Re: Explanation of Bankruptcy

Dear "Loan Officer's Name",

I am writing to explain the bankruptcy I filed on {date}. I had to file bankruptcy due to a series of unfortunate circumstances to my finances. Please allow me this time to explain.


Thank you for taking the time to review my explanation. If you have any questions, please do not hesitate to contact me regarding this letter.


Your name

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