Love, Loss, and Loans

May 27, 2022
Jackie Porter

Article written by Jackie Porter

Choosing to get a divorce can be daunting. Beyond feeling a million emotions all at once, you also can’t help but stress about what the whole process is going to cost. But the cost of divorce should never be a reason to stay in an unhealthy relationship. You deserve happiness. So, what can you do to ease your anxiety? Start by being prepared and knowing your financial options.

We get it, money can be just as daunting as choosing to get a divorce. But don’t worry, you don’t have to figure this out on your own. We are here to help. Read on for more details on ways you can finance your divorce.

What could my divorce costs look like and what is the average cost of a divorce?

The cost of divorce varies, but your family lawyer can help find a plan that fits your needs both legally and financially. They will be on your side to guide you every step of the way. For an amicable divorce where you and your spouse can agree on the terms of the divorce without much legal intervention, the cost can range from $1,353 for an uncontested divorce to $12,875 for a contested divorce. This can increase if you or your spouse decide to take each other to court. If you are considering taking out a divorce loan, it is important for you to understand these costs and how you plan on financing them in the best and worst case scenarios.

What Interest rate will I be paying on the divorce loan?

Before taking out any loan, it is important to know what interest rate you will be paying.  Some companies specialize in offering these types of loans. Luckily, divorce loans don’t typically require a credit check. Additionally, the payments often don’t start until your divorce is finalized. This is one less thing to stress over as assets are sometimes frozen during a divorce. That being said, it is still important for you to understand what interest rate and administration fee will be charged and if these rates will change over time. 

The general rule when it comes to interest rates is the easier a loan is to qualify for, the higher the interest rate.  The higher the interest rate the more it will cost you to finance the loan.  Additionally, always read the fine print. Administration fees can add up and may increase the longer your divorce drags on. Be sure to understand how the administration fees work so you don’t end up with sticker shock when the time comes to repay the loan.


What is my credit score and repayment history?

Before applying for any loan to help finance a divorce, it is a good idea to check your credit score.  Several online websites will allow you to check your score for free. Check out Borrowell or Credit Karma. Knowing your credit score will allow you to get a sense of whether you would qualify for loans on your own based on your credit history. Generally, the higher your credit score the more likely you will qualify for credit at lower interest rates. At a minimum you need a credit score of 650 to qualify for most loans. As interest rates are expected to creep up in 2022, you will need to be mindful of the amount of interest you are paying.

What are my other options to pay for the divorce other than a divorce loan?

There are many different options to consider for financing your divorce.

  1. An interest free loan from close friends or family. Having a supportive group of friends and family to help you through your divorce makes a world of difference. If someone from your circle can also help you with your finances, even better. Just remember, if you go in this direction, you will want to have clear repayment terms in writing. They say a surefire way to lose a relationship is to borrow money, so be sure you are confident in your ability to repay the loan.
  2. Personal Credit Card.  This may be an expensive option as not all lawyers accept credit cards. Additionally, the interest rate may be in the double-digit territory since the average credit card interest rate is around 19.99 percent. You may be in better shape with a divorce loan.
  3. Borrowing from personal investments or RSPs.  The good news with this option is there will be no loan to pay back. The bad news is, often people don’t reinvest the funds they withdraw and depending on the market could be selling at a loss. A financial expert can help you if you choose to go this route.
  4. Taking a personal loan.  Assuming you have good credit, this may be a viable option. You can choose the terms of the loan and know the interest rate you will be paying ahead of time. As most loans allow you to repay over 5 years, knowing these monthly payments is a perk. The big issue here is that you must apply for a fixed amount. Be careful to avoid borrowing more than you need.

Can I negotiate with my spouse to take funds from joint accounts to pay for the divorce?

Being able to communicate with your spouse as you navigate your divorce could ease the financial burden. Assuming you can negotiate accessing funds to pay for the divorce from joint accounts, this will be the single greatest cost saving to your mental health and your wallet.

Unfortunately, if you’re short on other options, and you’re both ready to move on from the relationship, borrowing to pay for your divorce will likely take a much smaller bite out of your finances.

We understand that divorce is tough for so many reasons. But you don’t have to go through it alone. Contact our team and we can help you every step of the way.