Statistics say that nearly half of all marriages end in divorce. However, it is possible that many more people would get divorced if money was not a factor. The average cost of a divorce is around $15,000 to $30,000. In high asset divorces, the expenses could exceed millions of dollars. Even if you opt for an amicable divorce and choose mediation, you can still expect to pay thousands of dollars to split up.
Divorce is stressful enough. It ends a relationship and can cause lasting damage to the children involved. Things would be easier if money was not a factor. Divorce lawyers would not have to turn away financially challenged clients. As it is, many shoulder the various costs along the way, which means many do not get paid the full amount they should be paid. While many lawyers offer payment plans, paying in full can still be difficult for someone who has no job or is about to be living on their own. When lawyers do not get paid, they cannot do their job as effectively. They cannot give their clients the best outcome possible.
With many couples quarantined together in efforts to contain the coronavirus, the divorce rate is bound to spike in a few months. With people losing jobs and barely surviving, how will they pay for a divorce?
There are many ways that people pay for their divorces, but sometimes none of them are feasible. Some have savings accounts. Others use credit cards or get personal loans. Some refinance the home and tap into home equity to pay the divorce lawyer. There are people who have to tap into their retirement accounts and delay retirement so they can pay their lawyer and get divorced. Some get help from friends and family members. If one spouse has money, they may be ordered to pay the lawyer fees.
When a person has none of these options available, paying for a divorce can be challenging. That is why many lawyers are presenting divorce funding as an option to their clients. Divorce funding has been in the United States since 2011, but not many people are aware of it. It is like a loan, but it is based on your expected divorce proceeds, not your income or credit score. You can use the money from divorce funding to pay for legal fees, experts, and living expenses.
Divorce funding is a good way to level the playing field in a divorce. You can hire the best attorneys and experts so that you can get the best outcome possible. You can uncover hidden assets and ensure a more secure future for yourself and any children. You do not repay the loan until you receive a settlement offer.
Divorce funding can be a game changer, especially in divorces where one spouse—most likely, the wife—has sacrificed a career to stay at home and take care of the children. These spouses typically have no savings or any money of their own, since they may not have worked outside the home for many years. How can they afford a divorce? With divorce funding, they can get the best team possible, with no money needed upfront.
How Does Divorce Funding Work?
Divorce funding is used like a cash advance. Each lender has its own requirements. They will determine the loan amount after assessing the marital estate and taking an estimated guess as to how much the borrower will recover in the divorce settlement.
However, not everyone is approved. If there are insufficient assets or a pre-or post-nuptial agreement that is very limiting, the lender may not approve the request. Also, each lender has its own minimum standards. In general, lenders will not approve amounts less than $25,000.
Pros and Cons of Divorce Funding
Divorce funding has some benefits. It gives those with financial hardships the money they need to divorce. They do not have to stay miserable simply because they lack money. It allows them to be more aggressive and hire the best representation possible. They do not have to settle for a small settlement.
There are some cons, however. Not everyone is approved for divorce funding, so there are no guarantees. Each lender has its own requirements, so it is possible you may not have enough assets available to qualify for such funding. Also, there are high interest rates involved. In some cases, it can be as high as 10%, which means a personal loan or borrowing from family members would be better options, if possible.
Is Divorce Funding Worth it?
While divorce funding is a viable option, it should not be your first choice. There are many less expensive alternatives. Ideally, the best course of action would be to save up for a divorce. However, that can take many years and is just not feasible for many people. Mediation is an option that can save money, but requires good communication and a lot of negotiation.
If you do not expect to get remarried, you can even consider separation instead of divorce. You and your spouse can live apart instead of spending thousands of dollars on a divorce.
Seek Legal Help
If money is a factor in deciding whether or not you can divorce, then you may want to consider divorce funding. There are pros and cons, just like everything else, but it gives you an option if money is tight.
You do not have to stay unhappily married if money is tight. Broward County divorce attorney Scott J. Stadler can help you understand your financial options. To learn more, schedule a consultation and call (954) 346-6464.