No one plans for divorce and rarely sets aside funds specifically to pay a lawyer; however, this doesn’t have to mean the cost of it breaks your budget.
Reduce the costs associated with your divorce by forgoing the “blame game” and being strategic about which issues are worth fighting over.
Taking out a loan
An installment loan to cover divorce expenses may help to ease financial strain during this difficult period, but it’s crucial that all options be fully explored before making your choice.
Personal loans tend to offer lower interest rates than credit cards, making them simpler to budget for post-divorce expenses. You could use credit cards instead, though doing so may have more serious repercussions for your credit.
Home equity lines of credit allow a homeowner to borrow against the value of their home at a variable interest rate for an agreed upon period of time, though this should not be used as part of funding a divorce proceeding as it could alter any potential financial settlement agreements.
Using your savings
Divorce can be an emotional rollercoaster. Whether you choose a contentious or amicable approach, it is crucial that your emotions stay under control when making decisions involving the divorce process. Unwise decisions made due to emotional decisions may cost more money due to mistakes like concealing details from your attorney who then have to devote more time and energy uncovering those details.
If you have savings to invest, they can be used to pay for lawyer’s services. Many attorneys offer payment plans and flat fees which make your legal expenses more predictable. Personal loans may also be better options than credit cards as they tend to feature lower interest rates and are less likely to cause financial strain if payments are missed; but be wary: taking this route should only be undertaken if your credit allows it.
Taking out a credit card
Credit cards can be an excellent tool during divorce proceedings as they allow you to pay your attorney fees in installments, with added perks such as points, airline miles and gift cards available from various cards. But remember, credit card usage will impact both during and after the process – so keep that in mind.
However, this should not prevent you from finding one who can meet your needs – simply bring up alternate payment methods during your initial consultation.
Using your 401(k) or retirement account
Individuals rely on their 401(k) plans or retirement accounts as an income stream in retirement, but these assets can be difficult to value and divide when going through divorce proceedings. Unlike IRAs, which are considered personal property that are subject to equitable distribution during divorce proceedings, 401(k) plans are considered marital property that should be distributed equitably between partners upon separation, including any money contributed prior to marriage and any funds accrued during it.
If you want to access your 401(k), you must abide by a Qualified Domestic Relations Order (QDRO). QDROs are complex documents and should only be prepared by an experienced divorce attorney; they could take six months or longer for completion. Furthermore, early withdrawal penalties of 10% apply if funds are withdrawn prior to age 59 1/2.
Using crowdfunding
Divorces can be costly, even when handled amicably. There’s paperwork, filing and serving fees and hourly legal fees all add up quickly – many turn to crowdfunding websites to cover these expenses.
These websites facilitate fundraising campaigns for various causes, including hiring a family law attorney. People can post profiles about their legal situation and invite friends, family and even strangers to donate via the platform.
However, prior to posting online your crowdfunding campaign for legal fees must be thoroughly planned and designed. Making it public may result in your name and case details becoming known to others and could potentially have serious repercussions; you also run the risk of contempt of court charges being laid against you, which could potentially carry jail sentences.
