How can I fund my divorce costs?
Those that come to us for advice are sometimes concerned about how they will afford to retain a solicitor. The shift from having joint finances to living separately can be daunting. We understand that not everyone can afford to fund their legal fees from their monthly income and believe that people should have as much information as possible to make an informed choice on how to fund their case.
Below I have explained some of the main ways that your legal fees can be paid for. The list is not exhaustive and as a team, we are always happy to discuss the options and to help find a tailored solution that works for your circumstances.
Using Savings
You may have savings that you can utilise towards legal costs. It is important to remember that in matrimonial proceedings everything generally starts as a marital asset, so although savings may be in your name, they may not fully belong to you. You may also need those savings to provide for yourself in the future or put towards re-housing yourself. That is why it is important to get clear legal advice at the outset of your matter so that you have an idea as to where you may stand legally and the overall costs of your case and can plan accordingly.
Private borrowing
You may consider borrowing money from friends, family, or even a new partner. This type of borrowing can have many advantages such as a lower rate of interest (if charged at all), more flexibility in terms of repayment dates and arrangements, quicker access to the funds required and no impact on the credit rating of the borrower.
However, the same advantages are also the reason why these are sometimes considered to be 'soft loans' and in divorce proceedings, the other party may try to argue that these debts are a gift and ask the court not to give them the same weight as other liabilities.
If you are considering this option, you can try to protect your position with a letter from the lender or a formal Loan Agreement.
If a judge decides that the loan is a soft one, it is down to their discretion as to whether or not it is included in the divorce’s financial considerations.
Commercial borrowing
You may be in a position to take a loan from a commercial lender, such as a bank or credit card company. There may also be the option of increasing existing mortgage facilities and using the equity in a property to secure funding.
These loans are likely to be considered 'hard' loans by a court and taken into account in relation to a final settlement. The consequence of this is that in the event that payment is defaulted, it is more likely to result in formal proceedings from the lender than with soft loans.
It is also important to remember that with commercial borrowing it is likely that repayments will most likely be due on a monthly basis from the start.
Litigation funding
There are a number of providers that offer loans designed specifically for the purpose of funding court proceedings for financial remedies and TOLATA (Trusts of Land and Appointment of Trustees Act 1996) cases. The terms of the loan will vary between providers and offer some advantages that commercial loans do not provide.
Legal Services Payment Orders (LSPOs)
An application can be made to the court once a divorce has been issued for a costs allowance to be paid from one party to the other. This means that where funds are available your ex could be ordered to pay your legal fees. The court will take into consideration the income and earning capacity resources of both parties along with the reasonableness of application. You will need to obtain evidence demonstrating that you have no access to funds from other sources. Evidence can include confirmation from your solicitor that a deferred payment arrangement is not available and similar letters from litigation loan companies. The order would only cover legal fees, not any other monthly expenditure.
Maintenance Pending Suit
It may be worth considering an application for a legal costs allowance as part of a Maintenance Pending Suit application which is an application for maintenance “as the court thinks reasonable”. It is an order for spousal maintenance to meet your interim income needs until a final settlement has been agreed or ordered.
Other Options
There may be other options specific to your circumstances. For example, it may be that we are able to agree a payment plan or provide limited advice and assistance as and when required. If you are concerned about affordability in anyway then we are always happy to discuss this with you and try to find a solution.
Initial Advice
For all our clients, we aim to offer a cost estimate as early as possible, so that you know what to expect for the legal route you are taking. Call 0330 0945 500, email family@neves.co.uk or complete our Contact Form and we'll get back to you.
