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Divorce can be a double whammy. First comes the emotional pain of divorce, and then the financial reality of the costs. While an uncontested divorce where all parties agree can only cost a few thousand dollars, according to a poll conducted by Nolo.com, the price can skyrocket when couples cannot agree. (You can view the personal loan rates you can use to pay for your divorce here..)
Depending on the situation, the divorce process can require a large amount of money in the form of attorney fees, fees, legal fees and, if necessary, a financial advisor and even forensic accounting and mental health counseling. Disputes over custody of children, alimony, alimony and the division of their property and debts can delay the process and lead to additional costs. This can easily add up to tens of thousands of dollars.
Without cash or financial support, a person may need to take out a personal loan to get through the divorce process. Most divorce loans are personal loans, which are unsecured loans, meaning they do not require collateral, but instead are lent based on your creditworthiness, amount of savings, and your overall financial history. Typically, you will repay the loan in monthly installments.
Depending on your situation, the size of a personal loan can range from $ 1,500 to $ 100,000. According to the latest Lending Tree data, the average new personal loan is USD 6092. Apart from using them to pay divorce expenses, personal loans are commonly used to consolidate debt or refinance credit cards. Interest rates can vary greatly depending on your credit rating and credit history, ranging from 3% to 36%. You can see the latest personal loan rates you can use to pay for your divorce here.…
For people looking to pay their legal bills on time, a personal loan may be a better option than charging all costs to a high-interest credit card that can start at 16% per annum. As with most loans, it is beneficial to use automatic payment to get them back rather than getting late fees. Some personal loans have a loan disbursement fee, an additional loan processing fee. Failure to fulfill loan obligations will negatively affect your credit history.
People may decide they want to take out a divorce loan if their money is tied to assets such as a house, or if the couple has one person holding a wallet. And while there is no specific data on the number of men and women who take out personal loans or bill their credit cards, experts often see a pattern in those who find themselves without access to $ 5,000–50,000 or more in cash.
“Usually those who do not deal with money in marriage find themselves without access to money after the start of the divorce proceedings,” said Avani Ramnani, managing director of the company. Francis Financial, a financial advisory firm specializing in helping women, many of whom are divorced, manage their money. “We have dealt with many cases where a marriage is worth millions of dollars, but a woman must depend on the kindness of others, even for everyday needs such as food.”
Even before the divorce proceedings begin, living expenses must be taken into account. “Are you really going to draw the line in the middle of the house:“ Just take the other side, you take the other side ”? No, it won’t work, “said Nicole Noonan, marriage lawyer and divorce finance specialist at New Chapter Capital. “It is not always possible for someone to really leave right away. So you have to make a plan for how to afford it. ”
While she tends to deal with wealthier clients (her company will make loans based on the projected settlement outcome), she says anyone can get caught financially, especially if the divorce gets tough and protracted. “People will fight over useless things instead of sitting down to lunch outside and discussing ten non-negotiable things they need to leave,” she said. “It’s a sad truth.”
How to financially prepare for divorce before getting out of marriage
“The most important thing to do is to understand the size of the home mortgage. Which bank it belongs to and whose name is written on it, ”Noonan said. “Make sure you have a marriage certificate, house name and passport. The more documents you have, the better prepared you will be. ”
If one spouse pays the bills and owns all of the finances, now is the time to start sitting down every couple of months and get a real idea of how much is spent on monthly bills, electricity, insurance, and whatever makes the household work.
For those concerned about access to cash or credit, Noonan and Ramnani recommend opening credit card accounts in their own name and opening a bank account to keep cash separately.
“People save money for a wedding, but not for a divorce, and that’s okay,” she said. “Start saving some money here and there, cut down on the extra costs. Everyone should save a small egg for a rainy day. ”