Getting Personal Loans for Divorce Legal Fees

The end of a marriage is rarely any fun, and there are consequences that extend far beyond the emotional distress, many of them financial. A study by the legal website Nolo.com found that the average cost of a do-it-yourself divorce without a lawyer was $925. When lawyers got involved, the average jumped from $4,100 for an uncontested divorce to over $20,000 for a divorce that went to trial.

When someone doesn't have the funds to pay legal fees and other expenses, it's often possible to take out a personal loan to cover them. Divorce loans can be used for many of the costs associated with a divorce, allowing the borrower to repay the money over the next two to seven years. Here's how these loans work.

What Is a Divorce Loan? 

A divorce loan is an informal name for a personal loan that's used to pay for a divorce. These loans are ideal for divorce expenses since they're typically unsecured (i.e., they have no collateral requirement), and since they provide a lump sum of cash that the borrower can spend however they wish. 

Personal loans for divorce also come with fixed interest rates and set monthly payments, which means you can borrow what you need, and you'll know exactly how much you'll owe and for how long. Generally speaking, divorce loans are available in amounts ranging from $1,000 to $100,000, depending on the lender. Typical repayment terms are from 24 to 84 months, although this also varies.

The best personal loans for divorce will typically be available to individuals with good to excellent credit, or FICO scores of 670 and up. For borrowers with lower scores, interest rates can be on the high side. Additionally, such borrowers are more likely to have to pay origination fees, which will be subtracted from the initial loan amount.

What Costs Can a Personal Loan Cover in a Divorce? 

A personal loan can cover any and all costs associated with a divorce, in addition to related expenses that pop up during and after the proceedings. Here's a rundown of some of the potential expenses you could use a divorce loan for:

• Initial divorce paperwork
• Attorney fees
• Court fees
• Costs for storage
• Divorce settlement 
• Tax advisor expenses
• Real estate appraisal work
• Moving or relocation expenses
• Deposits for home and utilities
• Mental health counseling
• New health insurance policy
• Furniture and household supplies

How to Get a Personal Loan to Pay for Divorce

While you're unlikely to find many lenders specifically advertising divorce loans, you can apply for this type of loan with any bank or other financial institution that offers personal loans. Many of the best personal loans are offered by online lenders, which makes it easy to compare options and look for the best rates before you apply.

In shopping for a loan, you'll want to compare available loan amounts, annual percentage rates (APRs), the length of their repayment terms, and any loan fees. Using a loan calculator can help you figure out what your monthly payment would be based on your APR, repayment term, and how much you borrow.

Before you apply it's a good idea to gather the necessary documentation, such as pay stubs, W-2 forms, proof of address, and possibly recent tax returns. Plan on sharing information like your full name, date of birth, Social Security number (SSN), employment status, monthly housing payment, income, and more on the loan application.

Pros and Cons of Getting a Personal Loan to Pay for Divorce

Other Ways to Finance a Divorce

There are other ways to pay for a divorce, and you may want to consider them in place of, or in addition to, taking out a divorce loan. Here are a few options to consider:

• Borrow from family: If you have family members or friends who are willing to help you through these challenging times, asking them for a loan could be an option. Just make sure both parties agree to all terms upfront and that you take repayment seriously. If you fail to pay the money back as agreed, that could ruin your relationship.
• Use a credit card: Credit cards tend to be an expensive way to borrow money for a divorce (or anything else). However, there are credit cards that offer 0% introductory rates, often for up to 21 months. Note, however, that you'll want to make sure your divorce attorney accepts credit cards as payment.
• Pay in cash: If you and your former partner have the cash to pay for a divorce separately or together as one, consider funding the process as you go. This will help you avoid new debt that can be difficult to pay off later once the divorce is complete.
• Ask your lawyer about a payment plan: See if your attorney will accept a payment plan allowing you to pay the bill over time. Note, however, that many expenses associated with divorce don't qualify for a payment plan, including filing fees and court fees.
• Tap into home equity: If you are living in a home with considerable equity, it's possible to use it as collateral for a home equity loan or home equity line of credit (HELOC). You'll just need to be clear on who is responsible for repaying the loan after the divorce.

The Bottom Line

Taking out a personal loan for divorce can make sense if you need cash now and you expect to have the income to pay it back later on. Just remember to compare lenders side-by-side to find the lowest rates and best loan terms. Also make sure you only borrow what you need, and keep in mind that your credit score and finances can improve as you pay it off.