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Most people have never heard about a divorce loan. But it can be a viable option for women who feel trapped in a marriage because they can’t afford a lawyer. Basically, this type of funding is a personal loan taken out for divorce related costs. Keep reading to find out if could be an option for you to consider.

Divorce Loan: What is it and how can it help you?

By Lyle Solomon, Attorney

Life does not always go according to plan. Divorce can happen in almost any marriage. Along with the trauma of ending your marriage, reaching a divorce settlement can be emotionally and financially draining.

The average cost of a divorce in the United States is $11,300, according to a survey about typical divorce expenses by It can go considerably higher if the case goes to trial. But, that doesn’t mean your divorce will be as costly. According to that same survey, 4 out of 10 people paid less than $5000 in attorney’s fees for their divorce.

What options do you have to reduce the cost of divorce?

Many people are hesitant to file for divorce because they believe it will be too costly. But why is divorce so expensive? Unfortunately, there isn’t a straightforward answer. The fees will vary depending on whether you and your spouse agree on the principal issues in your divorce and whether or not you will need the assistance of an attorney.

Apart from these, several factors influence whether the cost of divorce is high or low, including:

  • Whether you hire a lawyer for the entire divorce process or just a portion of it,
  • Whether you have kids or not,
  • The state where you are getting divorced,
  • Whether you and your spouse agree on fundamental issues,
  • Whether the divorce becomes contested and entails a court battle.

You can keep the costs of a divorce minimal if both of you agree on all the main issues, which is known as an uncontested divorce. In this situation, charges may be under $500 if your divorce is amicable and you prepare the divorce paperwork yourself. Of course, all states have filing fees, which will add to the expense.

How can a divorce loan help?

While some couples may have a decent net worth on paper, it usually isn’t practical to sell real estate or tap retirement accounts to pay for a divorce. And many people just don’t have the extra money available in their budget to pay for all the legal fees and expenses entailed in getting a divorce.

After the financial toll of the past few years, many people just don’t have the money to pay for a divorce outright, even though it is clear their marriage is over. If this describes your situation, a divorce loan might help you overcome this obstacle. In fact, the number of people looking for divorce loans continues to climb in the wake of the pandemic.

A divorce loan is similar to any other personal loan. It has its fee and terms attached to it. The interest rate you’ll pay on this type of loan will depend on your credit score and employment record.

Companies specializing in divorce financing will examine your case and offer you money depending on the amount of money you can expect to get when your divorce is finalized. Once you’ve received your divorce settlement, you’ll be able to repay the debt.

Why are divorce loans popular among women?

Many people use divorce loans to cover legal expenses and other expenditures associated with the divorce, such as living expenses. But, it has been seen that women are often the ones to take out this type of personal loan to finance their divorce. Why?

In some households, the man controls all the money, leaving their wives without access to any discretionary funds. Even if they work outside them home, a lot of women earn much less than their spouse and may unable to sustain themselves during a divorce. These women simply may not be able to afford to retain a divorce lawyer to represent them in a divorce.

Situations like these keep many women trapped in unhappy marriages. This is where a loan for divorce makes sense because it gives you the money you need to pay for the legal process.

Another reason women might consider this type of loan is to avoid informing their spouse they want a divorce before the divorce petition has been filed. Withdrawing funds from a joint account would probably raise red flags, while loan proceeds could be used to open a new account and pay for divorce-related bills without your spouse knowing.

Things to consider before taking out a divorce loan

Not everyone is a good fit for a divorce loan. To repay the loan, you’ll need a sound strategy in place to repay the loan. This may entail re-entering the workforce or getting a better paying job and considering what your financial situation will be after divorce. You might even have to take on a second job or sell assets to ensure you can pay off the loan.

You should find out what the expected monthly repayment is before taking out a loan to make sure it will fit into your budget.  Late or missed payments will hurt your credit score, so only take out a divorce loan if you’re confident you’ll be able to pay it back on time each month.

If you’re considering taking out a personal loan to pay for your divorce, do your research and compare your choices. Loan amounts, terms, interest rates, and fees can differ significantly from one lender to another. It’s also a good idea to compare other lenders, such as credit unions and online lenders.

And while it may be tempting, it is always a bad idea to take out a payday loan to finance your divorce. It just doesn’t meet your purpose. Most of these types of loans charge exorbitant interest and have a short repayment period, typically two weeks. If you can’t repay the loan in that amount of time, the loan can be extended for an additional fee. Doing this more than once can leave you owing double or triple the amount you originally borrowed. Once you mess up repaying a payday loan, you may end up searching for a payday loan consolidation program to get out of the debt cycle.

Who can qualify for a divorce loan?

Before you ask for a personal loan to cover your divorce costs, you need to meet some requirements.

  • Your credit score should be between 670 to 850 to qualify for a low-interest personal loan. Unsecured personal loans may not be available to people with credit scores below the fair range (less than 670).
  • You need to have a consistent source of income to ensure that you can repay the loan.

Other way to pay for your divorce

You may have alternative options if you don’t want to take out a personal loan to cover your divorce costs.

You can request a payment plan with your attorney. A payment plan allows you to pay your fee over time rather than in one flat sum or with a large retainer. Some attorneys might be willing to collaborate with you on this.

You can also use your credit card to pay for legal fees if you have the available credit on your card. The interest rates on most credit cards is usually higher than what you would pay for a personal loan to finance your divorce. Plus, it will take much longer to pay down your debt due to the nature of revolving credit.

Another option to pay for your divorce is asking for financial help from your family. This is probably best reserved for situations where you don’t need to borrow a substantial amount. To help preserve your relationship in the future, it’s always a good idea to draw up a loan agreement outlining how the loan will be repaid.

In Conclusion

If finances are a deciding factor in whether you can get a divorce or not, you may want to explore alternative ways to pay for your divorce. If you choose to get a divorce loan, do your research to make sure you are getting the best deal for your situation.

Lyle Solomon has been a member of the California State Bar Association since 2003 and been affiliated with various law firms since 1991. As the principal attorney of Oak View Law Group, he focuses on consumer finance law to help clients handle their debt problems and protect their finances. You can connect with him at Linkedin or tweet him at @lyle_solomon

Related:Controlling the Cost of Divorce

Can I Afford to Get a Divorce?

Is a Divorce Attorney Really Necessary?


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