Paying for the legal expenses to finalize your divorce and get an equitable settlement can quickly drain your bank account. What if you are still financially dependent on your spouse, and you finally separate? You might find yourself cash-poor and in need of assistance.
Relatively new to the scene, divorce funding firms are filling a previously neglected niche. These new firms allow the disadvantaged spouse to apply for resources to take their soon-to-be ex to court—and fight for what they feel entitled to. Not sure if a divorce funding firm is for you? To help you decide, we are going to answer three of the most critical questions about these firms.
Why hire a divorce funding firm?
Raising money to pay for your divorce can be a drain on your assets, your bank account, and your relationships with family members and friends. While it is possible to raise some money to cover the legal proceedings, it might not be realistic to cover the whole bill this way.
If your spouse has plenty of resources (but you are lacking in cash or sellable assets to adequately fight him or her), you might want to hire a divorce funding firm, such as Balance Point Divorce Funding, Novitas US, or BBL Churchill. Having the power and financial freedom to fight a fair, legal battle gives your spouse more incentive to pay attention to your demands—and to settle.
What does divorce funding cover?
Most frequently, divorce funding firms cover the cost of your proceedings, including the money due to your attorney, forensic accountant, expert witnesses, and any other professionals you might need to hire for a financially complex divorce. Because of the position that many individuals who apply for funding find themselves in, some will even fund living expenses during the proceedings—to assist you in building individual credit.
How do you repay a divorce funding firm?
- Percentage of your settlement - Some firms, like Balance Point Divorce Funding, will fund your divorce—with the expectation of receiving a specific percentage of the settlement amount. This percentage will vary, depending on the specific divorce- funding firm, but it could be as much as one-third of your settlement amount.
- Non recourse advances - A nonrecourse advance allows the divorce funding firm to collect interest on the loan to be paid after the settlement. In a nonrecourse advance, the lender cannot recover those funds—if he or she does not receive a settlement. For some firms, the interest payment can range from one to two percent each month.
- Recourse advance - This form of payment is similar to the above, but you still owe money—even if your settlement does not pan out. These advances make roughly the same percentage as the nonrecourse advances.
Hiring a divorce funding firm can make your soon-to-be ex sit up and take notice of the inequality they are asking for in a potential settlement. By gaining access to the funding you need, you can fight for what you feel you might be entitled to in the final settlement.
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