A major factor that people have to confront when deciding if they should go through with a divorce is whether or not they have the money necessary to pay for the process of obtaining a divorce. Another element is being able to maintain household finances during the divorce process and then once the divorce is finalized. These concerns are most prevalent amongst persons who are unemployed or who have full-time child-related responsibilities.
To help alleviate some of these concerns, it is imperative for the person desiring a divorce to learn about the true financial situation of their family. For instance, what are their assets? Is there a mortgage or a home equity loan existing on their residence? If a divorce were to occur, would either party be able to afford to continue to live in the marital residence, given the overall shelter costs, such as mortgage payments, homeowner’s insurance, real estate taxes, utility expenses, telephone charges, cable bills, etc?
Legal Retainers and On-Going Lawyer Invoices
Parties have several ways by which they can arrange to pay for initial legal representation fees and expert services and still provide themselves with enough additional monies to carry them through the divorce process period. The simplest method would be for the parties to mutually agree to utilize a joint marital asset, such as a joint savings account, and dividing it at the onset of the divorce case. This would hopefully provide each party with enough money to retain counsel and enable them to pay for their living expenses for several months after the divorce process has begun.
Additional funding can be provided from a home equity loan on the marital residence. Since it is presumed that each party will likely receive a share of the equity from the home sooner or later, parties may elect to mutually divide a portion of the equity at the commencement of the case. Obtaining a home equity loan would provide liquid assets (cash), thus saving the parties from having to place such counsel retainer fees on their credit cards, which would, in turn, increase their overall debt and could cause finance charges to accrue. In all probability, the interest rates on a home equity loan would be significantly less than the finance charges on a credit card.
Where a spouse does not have the income to make their own payments and the parties are unable to agree on the liquidation of a joint asset for payment of professional fees and living expenses, other alternatives do exist. This concern often arises where one party has full-time child care responsibilities and is out of the workforce, while the other party is considered to be the breadwinner of the family. In this situation, it is not unusual for one spouse, or the “homemaker,” to first place a retainer fee on a credit card and thereafter make an application to the court to obtain payment contribution toward those retainer fees from the “breadwinner” spouse should the parties not be able to come to a mutual payment arrangement on their own. Since the “homemaker” spouse may not have the means by which to pay the professional fees without invading joint assets, as no income is generated by that party, judges sometimes, though not always, require the working spouse to cover some, or all, of the initial litigation costs. In the alternative, the court may require that joint assets, such as stocks and bonds, be liquidated to pay for counsel or expert fees at least until a later final determination may be made.
Financial Support During the Divorce Process
If one spouse is struggling to make ends meet during the divorce process, that spouse could make an application to the court for what is known as pendente lite support. This type of application requests that the judge award to the dependent spouse and children, if appropriate, support monies to cover them during the period typically between the date that the support application was filed and the date that the divorce (or settlement) is finalized. Sometimes this provides to the dependent spouse enough money to pay for shelter, transportation and basic living expenses until such time that a more permanent financial resolution is reached.
When contemplating how one will survive financially after the divorce is concluded, a concern that often arises is how the parties will be able to pay for their living expenses, such as a new residence and standard monthly budget items, including groceries, medical and automobile insurance, car payments, clothing, child care, etc. There are some people who are fortunate enough to have more than enough money to cover all of their expenses, with plenty left over for savings. These people will not have to worry about this issue, because no matter how their assets are divided, they will be financially secure. However, many others find it challenging to meet their basic expenses even by using their combined incomes. They will need to do some financial planning in expectation of divorce.
Moving Into a Smaller Home During the Divorce Process
In this situation, it would not be unusual for both parties, upon divorce, to find themselves in a position where they would be required to move into smaller or less expensive shelter accommodations, such as a modest condominium or rental apartment. It is evident that when one spouse has to pay for all of the costs on the home without the other spouse’s income contribution, post-divorce, it can be more financially challenging. As such, after a divorce is finalized, the goal is that each party will be able to live a similar lifestyle to that which they enjoyed during the marriage. The difference is that they will be limited to their individual incomes and support, where available.
Even When The Parties Come to a Quick Settlement Agreement, the Process Takes Some Time
There is no doubt that obtaining a divorce can be an expensive endeavor. Even when the parties communicate well and are able to quickly negotiate a settlement in their case, the process can still take a significant amount of time to complete. Pleadings, such as a Complaint for Divorce must be filed. Case Information Statements, (which includes past and present income data, monthly budget information for the family and a detailed list of assets and liabilities) must be prepared. Settlement agreements should also be drafted so that the parties always have a written document to rely upon when they need to verify the terms of their agreement. This is an all-inclusive document, which includes protective language for each party and explains in detail what the settlement provisions are for the parties. The settlement agreement is a necessary document to have prepared so that in the event one party fails to abide by the terms of the agreement, the other party has a written document to prove what the agreement actually provided. The parties would be required to also appear in court (sometimes only one party is necessary) in order to put the final divorce on the record and so that the court may determine that the agreement was entered into voluntarily by the parties. While the process of the “uncontested” divorce hearing is generally only about 20 minutes long, there may be a period when the parties and their attorneys have to wait around for the court to become available, thereby causing the cost for counsel to increase.
Overall, the financial concerns of divorcing parties are real. The cost of litigation can be overwhelming at times. However, if the parties live within their means during the divorcing process and utilize their existing assets to assist in funding the divorce, they will maximize the amount of money that remains in their own pockets at the end of the day.
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