What is a hardship plan?

A hardship plan is a way for people in debt to get assistance from their creditors when they are unable to make their agreed-upon payments on time. Hardship plans are most often used for individuals who are facing financial distress due to an unanticipated event such as a job loss, medical emergency, divorce, or other unforeseen circumstances. In the state of Kansas, a consumer debt defense law was enacted in 2020 to provide additional protection for consumers and help them avoid further financial strain. A portion of this law includes the option to set-up a hardship plan with creditors. This plan allows consumers to take advantage of certain financial accommodations. A hardship plan can provide different options for debtors depending on their situation. These options include extending the repayment timeline, waiving late fees, reducing interest rates, and even lowering the amount of debt owed. Creditors may also be willing to renegotiate the payment structure to make it more manageable for the debtor. Hardship plans can be beneficial for both debtors and creditors, allowing debtors to keep their accounts in good standing while helping creditors avoid defaulted loans. When setting up a hardship plan, it is important for debtors to accurately assess their current financial situation and make sure they can meet the modified payment terms.

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What is a hardship plan?

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