Tuesday, March 31, 2015

Divorce Funding: What Is It?

By:  Carole L. Chiamp

Some clients who run from an abusive marriage learn all access to money has been cut off.  Credit cards no longer work, bank accounts are gone, the car that belongs to the deprived spouse disappears.  These clients are usually women and they are desperate.  If they have no relatives or friends to loan them money, they are bound to have some problems financing a divorce.

These are the kinds of divorces that often require lots of digging and discovery and involve hidden assets.  More and more of these clients are turning to divorce funding companies.  The funding companies stake the client without access to marital funds and takes their fees after a settlement is reached.  How they do this is technical, in order to avoid usury statutes.  Their interest rates are quite high, often 12-18% per year. But what these companies offer is high-interest money to people who have none and want to get their fair share from a person they once loved who controls a lot of money.  In some cases if no money is recovered, no money is owed to the funding company.

Anyone thinking of this sort of funding should exhaust other remedies first.  Some judges can be approached through motions for fees for the money necessary to be able to pay the retainer to be represented by a good attorney and to pay for necessary experts to get the job done.

    1.    Divorce Funding Firms Help Spouses Expecting Big Payouts, Paul Sullivan, New York Times article, 2/27/15.