June 21, 2019
Though not as costly as a wedding, divorce is rarely an inexpensive affair. The national average cost per person for a divorce is approximately $15,000. If that number makes your head spin, read on for alternative ways to pay for your divorce without breaking the bank.
When you’re strapped for cash or your finances are frozen due to divorce, planning for a set amount for legal representation may be a good strategy. Talk with your lawyer about setting up a payment plan to avoid owing a large lump sum at any one time. Alternatively, you can opt to use platforms like Wevorce that replace an hourly billing mediator or divorce attorney. These “pay-as-you-go” options offer a flat fee with no hidden costs so you’ll know exactly how much to plan for.
You’d be hard-pressed to find a financial advisor who would endorse borrowing from your 401(k) under normal circumstances. The reason why is it will cost you up to a 10% penalty fee as well as the responsibility of paying that cash withdrawal back. Remember, too, that your retirement account is considered a marital asset. If your divorce requires a division of this account, you may be able to avoid the penalty fee by transferring the owed amount to “an alternate payee” before age 59. Taxes still apply, however, at the regular rate.
Divorce can wreak havoc on relationships with family and friends. Many fear burdening their loves ones further by borrowing money to pay for a divorce. When your savings won’t suffice, a personal loan may be a good solution. A divorce loan can help pay legal fees, costs of moving out, or even eliminating your joint marital debt. As with any loan, do your due diligence first. Update your budget to make sure you’ll be able to cover the monthly payments without the assistance of your spouse’s income.
In all likelihood, your primary residence represents the largest marital asset to divide. You don’t necessarily need to sell your home, however, to split its liquidity or help finance your divorce. Rather, tapping into your home’s equity may be a good bet to cover expenses, especially if you want to retain your home post-divorce.
Home equity loans and cash-out refinancing offer access to needed funds but also come with the responsibility to pay back that amount—with interest. Alternatively, a Home Equity Investment like Hometap transforms your equity into debt- and interest-free cash in exchange for a share of the future value of your home when you eventually decide to sell it. Get an estimate to see how much Hometap may invest in your property.
Hometap Note: The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, consult with a licensed advisor.
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