If you've been contemplating divorce for some time, but don't feel you're able to financially support yourself after you leave, you may feel stuck and without options. However, a type of financial firm called a "divorce funding firm" may be able to provide financial assistance to help pay living expenses and other costs until your divorce is finalized and assets are split. Although these services are not available in all situations, they may be able to provide you with the necessary lifeline to help leave an abusive or otherwise harmful marriage. Read on to learn more about the services offered by these firms, and whether they may be able to assist you in a divorce.
What does a divorce funding firm do?
Divorce funding firms operate through several models. One type of funding firm will advance you money needed to pursue your divorce and pay living expenses without charging interest. When your divorce is finalized and your assets are divided, this firm will take a pre-determined percentage of the total -- similar to a contingency fee in other types of legal cases. This amount is generally enough to repay the amount you've borrowed, plus a bit extra for the service provided. Although firms are reluctant to disclose their exact pricing structure, many such firms set their fee at more than 10 percent of the marital estate, but usually less than 30 percent.
Another type of divorce funding firm will offer these funds in the form of a personal loan, with a higher-than-average interest rate. Whether or not the case settles for the amount anticipated, you'll be responsible for repaying any funds advanced by the firm.
Finally, certain firms will offer "non-recourse" funding -- they'll advance funds to help you file your case and pay living expenses, and if your case does not settle for enough to repay these funds (without leaving you destitute), the lender cannot recover. These types of loans are often the most difficult to obtain, as you'll need to have fairly thorough information on the state of your finances and the status of any marital assets so that the firm can accurately assess its risk.
All three models can offer an advantage to the spouse who is left without housing, transportation, or other basic needs once the marriage has ended, as well as those who are reluctant to file for divorce for fear of losing their home or access to money. In some situations, a spouse may have been charged with a white collar crime, and his or her bank accounts frozen -- leaving the other spouse without even enough money to purchase groceries or gas.
Is this an option in your situation?
Divorce financing is not available in every situation. In general, it's only a good idea to use one of these firms if you expect to receive a sizable portion of marital assets, and you know that these assets will be sufficient to repay the money advanced to you by the funding firm. Although some funding firms may make you a personal loan without requiring significant documentation regarding the amount you'll receive once your divorce is finalized, you'll still be on the hook for this money -- and can face penalties ranging from a collections lawsuit to wage garnishment. Check with sites like http://www.glfamilylaw.com for more advice.
However, if you're able to obtain a non-recourse loan from a financing firm, your risk is lower than it would be if you obtain a personal loan. Regardless of what happens with the case, you should be left with sufficient assets to support yourself -- and most importantly, you'll be free from a harmful or damaging marriage.
Share2 March 2015
My name is Noni. When I was in college, I was hit by a car while crossing the street. My life was never in danger, but I did break a few bones and had a lot of huge medical bills. I was hoping I wouldn't have to get involved with an attorney, but unfortunately, it came down to that. I used a family friend who is an accident attorney to get some compensation. A few years later, I was hit while riding my bike and had to go through the same process. I suppose I'm lucky to be alive. And it's thanks to accident attorneys that I have been able to put my life back together. I started this blog as a way to let others know just how much lawyers can help you in certain situations.