Do Divorce Lenders Discourage Divorce Settlements?

In many relationships, one spouse chooses or is able to stay home because the other spouse has a much larger earning capacity. This is particularly the case in situations in which one spouse makes a significant amount of money, such as a multimillion dollar annual income as a TV producer or real estate broker. While this arrangement often works well for couples throughout their marriage, finances may go downhill very quickly if the spouse who is earning the money decides to end the marriage. In too many cases, the earner spouse simply empties bank accounts, closes credit accounts, and otherwise restricts the other spouse’s access to marital assets. This places the non-earner spouse in a very precarious financial position, particularly if he or she has no income with which to hire what may be an otherwise unaffordable divorce lawyer who can handle a high-asset divorce.

Divorce Litigation Funding and Your Divorce

For some spouses who suddenly find themselves in this position, their only resource may be the few companies that are willing finance the costs of divorce litigation. Borrowers can use the proceeds of the loan to pay legal fees and necessary living expenses, with no payment due until the divorce is final. While the loans are similar to credit card accounts, in that they carry an annual interest rate of 18% to 20% per year, the expectation of most spouses using this service is that they will repay the loan with the proceeds from the divorce. Another divorce funding company simply takes a cut of the assets that the spouse receives when the divorce is finalized. As a result, these divorce funding companies are choosy about which cases they will finance; some companies will not fund a spouse’s divorce unless there is an estate of at least five million dollars. Similarly, if the divorce involves a prenuptial agreement, the spouse must be entitled to at least five million dollars.

Pros and Cons of Divorce Litigation Funding

The lure of divorce litigation funding is that it allows non-earner spouses to exercise some control and decision-making over their divorce proceedings. Without funding, the spouse might be subject to large legal fees that he or she cannot afford, as well as other related fees, such as those of investigators or accountants. While the spouse can ask the court to order the wealthy spouse to pay his or her fees, there is no guarantee if and when the court will grant such a motion. This may put pressure on the spouse to settle early and for less than to what he or she is entitled. On the other side of the coin, however, funding for divorce litigation may actually discourage settlement. When a spouse doesn’t feel the financial pressure and/or thinks that he or she can get a better result through litigation, he or she may simply refuse to settle. And for a spouse who has been scorned and rejected by the other spouse, sometimes continuing to fight seems like the best thing to do.

Contact Your Fort Lauderdale Divorce Lawyer

Choosing whether to settle your divorce case or litigate it through court proceedings can be a difficult choice, for a number of reasons. All too often, money can be a significant factor in this decision. As making this sort of decision is very important and involves a number of important considerations, you should be aware of all available options in order to make the right decision. As a result, you should always consult with an experienced Florida divorce lawyer at the office of Vanessa Prieto before making this sort of monumental and perhaps irreversible decision.