Paying Your Divorce Lawyer with a Personal Loan

Divorce can be emotionally draining, even when the parties are in agreement. But besides the emotional and psychological toll of a divorce, there’s the financial burden. I was a divorce lawyer for more than two decades, so I speak from firsthand experience. Divorce is one of the main reasons bankruptcy is filed, and many times clients are forced to get personal loans to pay for a lawyer. In this blog, I’ll discuss the issue of financing a divorce with a personal loan.

Key Points:

• Divorce can be financially draining and is one of the main reasons people file for bankruptcy.
• The expense of hiring a divorce lawyer in a contested case could cost tens of thousands of dollars.
• A personal loan can be an excellent way to pay attorney fees in an uncontested divorce because the total cost is predictable.

I’ve said this many times in prior blogs, and the top three reasons people file for bankruptcy are medical bills and health-related issues. The remaining reason is divorce. That’s why I have always been critical of the 2005 bankruptcy law called the Bankruptcy “Abuse” Prevention Consumer Protection Act.

What abuse? People can’t help if they get sick and have to pay tens of thousands of dollars in hospital bills, and no one gets married with divorce on their mind. But that is the message Congress conveyed on why bankruptcy law had to be changed. To stop the “abuse.”

So, as you face financial difficulty and legal fees eating up your savings and paycheck, the issue is whether you should get into more debt to hire a divorce lawyer. A personal loan can be an option, but you must weigh the pros and cons carefully before you decide.

What Type of Divorce Do You Have

There are only two categories under which a divorce or paternity case falls. The case is either agreed to and uncontested or litigated and contested. Most of the time, the parties know where their case falls. So, let’s start with an uncontested divorce case.

Uncontested Divorce Case

When a case is uncontested, the parties agree on all the issues in their case. So whether children or assets are involved, where a home has to be sold, custody and child support are decided, and both parties agree on all the terms and conditions. When that happens, the process is simple as the divorce is filed with all the required documents, and depending on where you reside, the judge may require a quick hearing to review the divorce documents or may not require a hearing.

• How Bankruptcy Can Affect a Divorce Case

Of course, an uncontested divorce case is much cheaper and less expensive than a contested case. Divorce attorneys usually charge a flat rate for uncontested cases.

Because in an uncontested divorce case, attorney fees are known in advance, a personal loan could be an excellent way to pay the attorney fees.

If both parties agree, they can even decide to split the personal loan. That detail will be listed in the marital settlement agreement. If one of the parties fails to comply with the agreement and that clause, the case can return to court to enforce the agreement. That is known as a motion for contempt.

Contested Divorces

In contested divorce cases, specific issues are not agreed to and will be litigated. For example, the parties may disagree with custody or visitation. When there isn’t an agreement in a divorce or family law case, the cases take longer to resolve because the parties are obligated to attend mediation. If there’s no agreement, then the court will schedule a trial.

The problem with contested divorce cases is that it is practically impossible to determine the attorney’s fees. At that point, the lawyer requests a retainer or deposit to start the case. Fees are now charged hourly, and when the retainer has been used, the lawyer will require another deposit to move forward with the case.

• The Issues Caused with Divorce Cases, Mortgages, and Bankruptcy

At this point, clients have always asked me how much this will cost. I cannot be more honest when I respond that there’s no way to predict that. While that doesn’t seem possible, look at it from this perspective as it is the example I’ve always used with clients.

If both parties hire lawyers, four people are involved in this case. If any of the four people involved are unreasonable, settling the case is much more challenging. The longer the case remains pending, the more issues arise, and the more attorney’s fees will increase.

For example, I will ask my client if their spouse is reasonable. If the response is that they are not, then any reasonable offer to settle the case will be rejected. It will make it more challenging to settle. The same applies to attorneys who love to litigate every issue unnecessarily.

In addition, it also depends on the particular facts of the case. In some cases, multiple temporary hearings could add to the time the lawyer has to invest in the case. For example, suppose one spouse is no longer cooperating with the household expenses or is not providing financial support for the child. In that case, that might require filing a motion and scheduling a hearing before the judge. This will result in several additional hours devoted to the case.

Should a Personal Loan Be Used in a Contested Divorce or Family Law Case?

If you are facing a contested divorce case and considering a personal loan to pay for your lawyer, there are several factors to consider. Let’s start with the benefits of using a personal loan to pay for a divorce or family law attorney.

Pros of Using a Personal Loan

A personal loan can provide a lump sum to cover your attorney’s retainer and ongoing fees. Depending on the case’s specific facts, this may be enough to get the case started. For example, if there is a substantial gap in income, your spouse may be required to pay your attorney’s fees. However, with the initial deposit or retainer, your lawyer could start your case.

Another important feature of personal loans is fixed rates and payments. Unlike credit cards with variable interest rates, personal loans offer fixed rates and predictable monthly payments. This allows for better budgeting during an already uncertain time.

For example, suppose there is a house you know has to be sold in the divorce case because neither of you can afford to maintain that house on your own. In this case, a personal loan with fixed monthly payments could be enough to get you through the end of the divorce. Once the home is sold, your share of the sale proceeds can be used to pay off the loan.

Personal loans also have a lower interest rate when compared to credit cards. This can save you money in the long run.

Unsecured Personal Loans

Note that most personal loans are unsecured, meaning you don’t need to put up property as collateral. If the bank requires collateral to secure the personal loan, note that with the divorce case pending, that should not be done as that could be considered dissipating or wasting marital assets and could lead to further complications.

The Cons of Using a Personal Loan

Obtaining a personal loan means increasing your overall debt. So you have to make sure you can afford the additional debt unless other factors come into play, such as qualifying for your divorce lawyer’s fees being paid or spousal support.

Also, getting a personal loan will impact your credit score. This is important because you have to look at the long-term consequences. For example, if you cannot pay off the personal loan at the end of the divorce case, you might need to apply for a car loan or even an apartment; that extra debt will affect your credit score. It could result in getting rejected for a new lease or car loan.

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This post was updated on February 12, 2025.