Paying for your divorce — what are the options?

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You don’t have to get divorced or dissolve your civil partnership using a solicitor. You can do it yourself or use mediation instead. But most couples still use a divorce lawyer, and that means there will be legal bills to pay. If you can’t pay from savings and you don’t qualify for legal aid, how can you afford it?

Legal aid

In England or Wales, you will only qualify for legal aid to help pay legal costs if you’ve been a victim of domestic violence or child abduction is involved. Legal aid is available to pay towards mediation. In Scotland and Northern Ireland, legal aid is more widely available.

Funding from your ex

Solicitors say that in a number of cases a husband or civil partner will agree to fund their ex’s divorce in order to get the divorce or dissolution sorted out quickly. You won’t necessarily have to ask your ex directly if you don’t want to as your solicitor could ask him or her on your behalf.

Borrowing from family or friends

You may be able to borrow from family or friends and it may be cheaper and much easier than borrowing from a bank. However, a court may not take a loan from family and friends into account when considering how to divide the finances between you.

SAVVY TIP: Make sure you can pay back any money you’ve borrowed or you could jeopardise the friendship or family relationship.

0% credit card

If you can get a credit card that charges 0% on purchases (especially if the deal runs for quite a long time — say a year or more) you could use it to pay your legal bills. Once the 0% deal runs out the interest rate can rise quite sharply, but it might give you the breathing space you need.

SAVVY TIP: Most solicitors accept payment by credit card, but it’s worth checking when you first speak to yours.

Personal loan

Shop around to get a competitive rate on a personal loan. High street banks tend to be uncompetitive, especially on smaller loan sizes (such as up to £2,500 or so). Interest rates are tiered so the more you borrow, the lower the interest rate you pay.

SAVVY TIP: It sounds perverse but you may get a better deal by borrowing slightly more (especially if you want to borrow around £2,500, £5,000 or £7,500, which are key ‘threshold’ levels). You should try and repay the money you don’t need as soon as possible.

Be aware that the interest rate that’s quoted on websites or adverts may not necessarily be the rate you are offered.

SAVVY TIP: Increasingly, loan providers work out how much interest they’ll charge on the basis of your credit report and factors like employment status.

Divorce loan

You may be able to take out a special ‘divorce loan’, either directly with the loan provider or through your solicitor. Two companies that offer divorce loans are Iceberg Client Credit and Novitas.

SAVVY TIP: Solicitors who are members of the family law organisation for England and Wales called Resolution, can offer loans from Iceberg Client Credit at cheaper rates than other solicitors.

A divorce loan is different to an ordinary bank loan because:

  • You only have to pay the interest while your divorce is going through, not the capital.
  • You are given a loan limit, but you may be able draw down what you need when you need it to pay your bills (up to the limit) or your solicitor may be able to get payment directly from your loan reserve.
  • Interest can be deferred in some cases, which means you don’t make any payments at all while your divorce goes through.

Applying to the court

A court can order that your husband or civil partner makes a payment to cover your divorce costs. You wouldn’t be able to get this type of order unless you could show that you weren’t able to borrow money from anywhere else.

Paying from your settlement

Some law firms will let clients pay their legal fees when their divorce has been finalised and once they have reached a financial settlement. This type of funding is sometimes called a ‘Sears Tooth agreement’ after the law firm that first offered it.

Not all legal firms will offer this option, and those that do will not offer it to all their clients, but it is worth asking about.

Should you borrow?

Don’t take on extra credit if you’re already in a financial black hole. What a 0% credit card or bank loan should enable you to do is pay the bills (including legal costs) until your financial situation improves.

However, if you know that’s unlikely to happen once the divorce has been finalised, try not to borrow more from the bank or credit card companies. If you can’t keep up the repayments you’ll have bigger money problems than you started out with.

Related articles:

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If you’re divorced, was your pension divided correctly?

VIDEO: How to protect your finances if you have joint accounts and have split up with your partner

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