Divorce is the most significant financial transaction of most people’s lives, so it’s critical to have a plan to pay for it.
Many people are not prepared for the fees when they file for a divorce, including the cost of mediation, parent education classes, counseling sessions, and forensic accounting. A contested divorce can cost upwards of $15,000 to $30,000, with some high-net-worth divorces soaring into the 100’s of thousands. Some spouses will dip into savings accounts or charge legal fees on credit cards. Other options may include turning to the bank to refinance the marital home to pay legal costs. Another alternative is Divorce Litigation Funding, which can help level the playing field by allowing a spouse to borrow money to hire a qualified attorney, legal experts cover reasonable living expenses. Third party funding is most commonly used in high-value divorces where one spouse requires significant resources to maintain financial security in contentious fights over child custody or spousal support.
Whenever you make a significant investment, knowing the cost and what you are getting for your money is essential. Trying to have the cheapest possible divorce is not a good solution. It can sometimes backfire, forcing you to spend a lot more than you would have if you had hired an experienced divorce lawyer with an excellent success record before you filed for divorce. Investing in quality legal representation for your divorce might be one of your most significant concerns. You want quality, but you also want to get the best value for the fees you are paying. But affordable quality services are not always easy to come by. Therefore, if you’re worried about how you’re going to fund the legal costs of your divorce, then litigation funding could help.
According to a MarketWatch article, most divorce loans are personal, unsecured loans based on your creditworthiness, how much money you have in savings, and your general financial history. Generally, borrowers may be allowed to pay back the loan in monthly installments, an option many people would consider. A loan is a better option for many than putting all of the costs on a high-interest credit card or having to dip into savings/retirement accounts.
According to Bloomberg Law, divorce litigation funding can be beneficial by providing the funds to help to divorce spouses find hidden assets and ensure a more secure financial future for themselves. It can also help divorce attorneys secure the best possible results for their clients by ensuring that financial constraints do not compromise the case’s outcome. Resolving family law disputes can be expensive. In some divorce cases, the costs may be unpredictable, leaving some people unable to pay their legal bills, which can cause tension between client and attorney.
Many factors affect the overall cost of a family law case, including the complexity of contested issues, the size of the marital estate, and the emotional content that invariably drives each party. Divorce litigation funding is a way to make sure that attorneys get paid on time, every time, help improve cash flow to the firm and allow for the repayment of money owed to the firm by the current client.
If you’re stuck in a broken marriage and can’t afford to go through the divorce process, there are actions you can take that can ensure that you don’t break the bank. If you are considering taking out loans to fund your divorce litigation you will need to have a financial plan for managing the loan repayment and your future financial picture in general. Develop a goal early on for financing your divorce. If you are informed, aware, and wise, your financial investment in your divorce will be money well spent to protect your financial future.
Schoenberg Family Law Group, P.C., helps clients establish priorities, choose their battles, and secure their fair share of the estate, so they will emerge from the divorce in the most beneficial financial position.
Written by Debra Schoenberg