A divorce can cost thousands of dollars in attorneys fees. If you don’t have funds to pay for your divorce through assets you and your spouse jointly own, loans, credit cards, and legal aid may all be options. Here’s what to consider when figuring out how to pay for a divorce.
Key Takeaways
- The primary source of divorce funding comes from shared marital assets—savings, investments, and other assets both spouses own.
- If marital assets are insufficient, there are a number of divorce payment options, including home equity loans, credit cards, personal loans, and help from legal aid organizations.
- Your financial situation and personal preferences can help you decide on the ideal way to pay for a divorce.
- If possible, avoid using pre-tax retirement assets to cover divorce expenses, or you’ll be on the hook for taxes and early-withdrawal penalties.
How Much Does a Divorce Cost?
According to Carl Graham, a divorce attorney at Graham Law, a typical uncontested divorce will cost between $4,000 and $8,000. A contested divorce could run you as low as $10,000 if the financial issues are fairly simple, or more than $50,000 if there is a custody battle and experts are needed.
Graham’s estimates are in line with a survey by the legal site Nolo that found the median cost of attorney’s fees for a divorce with a lawyer in 2019 was $7,000, and the average was $11,300.
Note
An uncontested divorce is when both parties agree on all major issues. A contested divorce is when there are disagreements on major issues and the court must step in to determine the final outcome.
Ways To Pay for a Divorce
There are a variety of ways to fund a divorce. Factors like your income, assets, and needs and preferences will all play a role in the option you choose. According to the experts we spoke with, the first source of funding will be your marital assets—the savings, investments, and other assets you and your spouse share. If those are not sufficient to cover your costs, you have a few options.
Home Equity Line of Credit
Aviva Pinto, certified divorce financial analyst (CDFA) and managing director at Wealthspire, said one option is a home equity line of credit (HELOC). As long as you and your spouse agree to a loan against a house you both own, a HELOC may make sense as a way to cover divorce expenses.
Depending on your loan, you may be able to borrow up to 85% of the equity in your home. You can withdraw funds as you need to, up to a set credit limit, and you will only pay interest on what you borrow. Plus you may lock in a lower rate than you’d be able to elsewhere.
Legal Aid
If you have a fairly low income, you should explore getting help from legal aid organizations. These organizations offer free or low-cost support for a variety of legal issues, including divorce.
“To find out if you qualify for legal aid, you can contact your local legal aid office or visit their website,” said Andrew Lokenauth, a finance and accounting executive, in an email interview. “You can also talk to your divorce lawyer, who may be able to help you find legal aid services in your area.”
Tip
To find a legal aid organization near you, visit the Legal Services Corporation website. It’s a nonprofit organization funded and overseen by the federal government with the mission of promoting equal access to justice.
Personal Loan
Another option is a personal loan. Pinto suggested this could be a good choice, as long as you can show separate assets from your spouse and you have a good credit score that can lead to a low interest rate.
With a personal loan, you’ll receive a lump sum of money up front. Then, you’ll repay what you borrow with interest and fees over an agreed upon period of time, which usually ranges from a few months to several years. Personal loans are available at banks, credit unions, and online lenders.
Credit Card
“There are many ways that clients pay for a divorce. Most do so by using a credit card,” said Rajeh A. Saadeh, a divorce attorney at The Law Office of Rajeh A. Saadeh.
Ideally, you’d go this route if you’re confident you can repay your balance quickly and avoid high interest charges. If you have good credit, you might want to use a credit card with a 0% introductory APR period and work to pay off your divorce before the promotional rate ends.
Possible Pitfalls When Paying for a Divorce
There are a couple of routes you want to avoid or tread cautiously with when looking for a way to finance your divorce. “You do not want to draw down on pre-tax retirement assets to pay for your divorce expenses, including attorney fees, as you will be taxed and, depending on your age, penalized for doing so,” said Saadeh.
“Also, if you decide to liquidate investment assets, such as stocks or cryptocurrency, any gain may be subject to taxes, which you may want to avoid as well. Depending on the tax rate, however, that may be better than paying for attorney fees using a high-interest credit card,” he said
Frequently Asked Questions (FAQs)
How do I pay for a divorce attorney?
When a divorce attorney takes your case you will likely be asked to pay an upfront fee—a retainer—which can range between $1,000 to more than $25,000, depending on the complexity of your case. Payment methods vary (many attorneys accept credit cards, cash, and checks), and the source of the funds will depend on your financial situation (credit, borrowed funds, savings, etc).
How do I get my spouse to pay for my divorce?
Depending on the state you live in, you may be able to ask the court to direct your spouse to cover your legal fees. The judge will weigh several factors in making the decision, including each spouse’s relative financial circumstances.