They say divorce is expensive because it’s worth it. However, it’s the expense of a divorce that is typically an impediment for people to file. If there is nothing to fight over or the divorce is amicable, there is always a possibility of the spouses coming to a settlement themselves. However, in reality, it’s often not that easy and third parties or the court are necessary. If you aren’t the breadwinner in a relationship or don’t have savings of your own, how can you afford to file? How can you afford to pay a lawyer a retainer fee? Historically there have been very few options – either you had money, or you had friends and family to turn to for money to hire counsel. Of course, there are credit cards, but they come with monthly payment requirements and high credit score requirements. What if you can’t make those payments? Divorce funding may be an option. Here are the top 7 things you need to know.
1) What is Divorce funding?
Divorce funding is a newer concept that not many people have heard about. In fact, when Jessica and T.H. interviewed Nicole Noonan, who is a lawyer and the founder/CEO of New Chapter Capitol, on the Divorce, etc… podcast about the idea, neither of them had ever even heard of it! In a nutshell, divorce funding is a monetary advance based on the client’s potential divorce settlement. Think of it as a loan to pay for your divorce costs. If someone doesn’t have access to savings, liquid cash, or stocks that can quickly be sold to pay for legal fees, but they will be getting some sort of settlement when the divorce is finalized, they may very well be eligible for divorce funding. Nicole says the money can then be used for legal fees, expert costs, and best of all, for reasonable living expenses.
2) When can you apply for divorce funding?
An application for divorce funding can be made at any time during the process, as long as the client is already represented by counsel. Divorce funding is not an option for anyone who is self-represented or has not already hired a lawyer. Nicole explains that the law firm will need to fill out the application on the client’s behalf, and anyone at the firm can complete the application if she/he is familiar with the case.
3) How do you qualify for divorce funding?
As no two cases are the same, Nicole admits there is no hard and fast rule for exactly how one qualifies for divorce funding. However, there needs to be something or some measure of assets, that will be able to be used to repay the funding at the end of the day. If there are no assets to be divided, and therefore no payout to the client at the end of the process, a client should not need funding.
4) What are the terms of repayment for divorce funding?
Fortunately, at New Chapter Capitol, no repayments need to be made until the client reaches settlement. There is a monthly fee on whatever is taken out or borrowed, but nothing needs to be paid back during the course of the case.
5) What if the client gets less than what is expected?
This is one of the reasons people don’t get approved for more than what is believed they would receive. At New Chapter Capitol, Nicole says their underwriters stick to approving about 20% of what they believe the client will receive. They do not believe in throwing good money after bad, and neither should the client.
6) What assets are taken into consideration when it comes to divorce funding?
Nicole says they have approved clients dividing everything from houses to horses. They’ve valued more traditional assets, such as art and wine, but are also open to considering other items when it comes to what they believe will go into the total marital asset pool.
7) Are there minimum or maximum amounts permitted for divorce funding?
There are no maximum funding amounts. New Chapter has funded cases in the millions and as little as $20k. There don’t need to be assets to be approved, as long as there will be a monetary settlement in the end.
It’s important to keep in mind that divorce funding is not available for everyone, nor for people who simply don’t want to spend their money on divorce at the moment. But it is a terrific option for those with little liquidity but for whom money and/or assets will be gained after the divorce is finalized. Nicole says New Chapter Capitol funds cases from coast to coast, so no matter where you live, this could be available to you, if you qualify.