How to pay for a divorce with limited funds
Paying for a family lawyer to handle your divorce may seem impossible — particularly if your former spouse was the primary earner in your household. But, while expenses associated with a divorce can rise quickly, there are options available to finance your divorce while waiting for your equalization payment, says Easy Legal Finance Inc.’s Chief Operating Officer Nicole Popovich.
Although there is a cost associated with hiring a divorce lawyer, it can be money well spent to understand your responsibilities and entitlements better. In addition, an experienced divorce lawyer can help you avoid making mistakes that could affect your financial future for years to come.
“If your divorce is uncontested and amicable, you might be able to cover your legal fees and day-to-day expenses with your savings, a line of credit from your bank, or borrowing from friends and family,” she says.
However, if there are issues that you and your former partner cannot resolve, your costs could increase. If you anticipate or are experiencing financial hardship during your divorce, there are some ways to reduce your costs and cover your expenses without giving up your entitlement.
Alternative Dispute Resolution
Bypassing litigation in favour of mediation or a collaborative approach is a cost-effective way of resolving any differences with your former partner. In addition, recent amendments to the Divorce Act signal a distinct shift away from the adversarial nature of litigation to make the family justice system more accessible and efficient.
As of March 2021, family lawyers are expected to encourage clients to solve issues through out-of-court methods unless it would be inappropriate.
“Mediation, for example, may be a faster way to resolve a family law dispute and will come with enormous cost savings when compared with litigation,” Popovich says. In addition, parties do not have to be amicable for the process to work. However, you and your former partner should be open to the process and willing to compromise.
There is also the option of carving out one or two issues for mediation and litigating the rest. The method you choose does not have to be all or nothing, and an experienced family lawyer can help you consider your options.
“When you have limited funds to pay for your divorce, it can make an already draining situation even tougher to deal with. Fortunately, there is a way to finance the process. Using a divorce loan can help you regain control, receive the settlement you deserve, and move on with your life. Divorce is hard. Financing it shouldn’t be.”
Divorce Financing
Divorce loans are a relatively new concept in the Canadian marketplace but have been established for quite some time in the United States, the United Kingdom and Australia. Easy Legal recently launched divorce financing in Ontario and Alberta based on, in part, input from Canadian legal service providers, says Popovich.
Easy Legal’s divorce loans provide a line of credit specifically designed to fund legal costs and everyday expenses. Because it is not uncommon for a person to run out of available funds based on the length of their divorce proceedings, a divorce loan can provide a boost to get you to the finish line.
Let’s look at a fictionalized divorce case study that will help illustrate how divorce loans work.
Case study
After several years of marriage, Evelyn and George are getting a divorce. George has an average income of $200,000, but stay-at-home mom Evelyn has had little to no income throughout the marriage. The assets are in George’s name. He owns a small business and has RRSPs. The matrimonial home is also in his name. Based on Ontario’s equalization formula, George’s net family property is $2,000,000 and Evelyn’s is $0. George will owe Evelyn an equalization payment of $1,000,000.
Evelyn applies for a loan of $50,000 to pay off her lawyer fees, with a reserve for her living and moving expenses.
Evelyn’s situation is ideal for a divorce loan because she has retained a lawyer. The lawyers have a clear idea of the family assets and the forthcoming equalization, and her equalization can support the loan.
Evelyn can cover her legal fees and everyday expenses with a divorce loan until she receives her equalization payment in six months. Once she gets her settlement, she pays back her loan.
“When you have limited funds to pay for your divorce, it can make an already draining situation even tougher to deal with. Fortunately, there is a way to finance the process,” says Popovich. “Using a divorce loan can help you regain control, receive the settlement you deserve, and move on with your life. Divorce is hard. Financing it shouldn’t be.”
If you are interested in applying for a Divorce Loan, please click here to apply or call 1-866-800-2100 to speak with one of our customer service representatives.
Nicole Popovich is the COO of The Easy Legal Group of Companies, a specialty lender focused on providing credit solutions to the legal sector, including its clients and service providers.