Can You Get a Personal Loan for Divorce?

Can You Get a Personal Loan for Divorce?

Divorce comes with a varied set of challenges, both emotional and financial. Individuals often encounter frustratingly high costs during divorce proceedings. Expenses arise from legal support, court fees, and other necessities, especially in a contested divorce. Financing often becomes necessary.

In this guide, we go over the financial impact of divorce and how [personal loans] could help fund your expenses.

Understanding the financial strain of divorce

Divorce frequently poses a significant financial strain, with the average divorce costing around $15,000. Here are the main sources of bills during a divorce procedure.

Attorney fees

Most attorneys bill by the hour, which means that the longer your divorce proceedings, the more expensive they will be. The average hourly rate of divorce lawyers across the United States is roughly $270 an hour. The individual rate can vary greatly depending on where you live and which lawyer you choose.

Court costs

Filing for divorce comes with various court fees, the exact amount depending on where you live. Court filing fees typically amount to several hundred dollars.

Mediation fees

Mediation refers to the structured process during which a neutral mediating person helps the two parties reconcile differences, compromise, and negotiate. You might need to pay for mediation fees during divorce procedures.

The average cost for divorce mediation ranges from $7,000 to $10,000, making it a substantial part of divorce bills. Usually, the mediation cost is split between the two parties.

Property division

Property division can be difficult, time-consuming, and expensive, especially if it is a contested divorce. The process can result in additional attorney fees.

Emotional decisions

During divorce proceedings, it is easy and common for people to make emotional, impulsive decisions that impact their financial planning and management. This can range from neglecting assets and quick settlements all the way to devoting hundreds of thousands of dollars to win the divorce case in court.


Traditional divorce financing options

Relying on savings

Many individuals choose to rely on their savings, at least at the beginning of the divorce. However, dipping into savings can pose new challenges, especially since assets need to be divided during the divorce process.

Liquidating assets

Methods of liquidating assets include selling:

  • Shared property
  • Stocks
  • Collectibles and other valuables

Borrowing from family and friends

Divorce is a tough, emotionally grueling process. If you have any friends and family who sympathize with your situation, you may be able to receive financial support from them.

However, it’s important to carefully think about the potential impact on your relationship with the lender since the amount borrowed for divorce can be significant. Borrowing from a friend or family member during these trying times could also result in extra interpersonal stress.

Delving into personal loans for divorce costs

You can borrow a personal loan from loan providers, such as banks, credit unions, and online lenders. Most loans are unsecured, which means you don’t need to back them with collateral assets. Over the life of the loan, you will need to repay the loan amount plus interest.

A personal loan can help finance expensive procedures, such as divorces. Here are the main advantages of using a personal loan to cover divorce expenses.

Gain immediate access to funds

After a loan provider approves your loan application, the loan funds will be quickly disbursed into your chosen bank account. This allows you to promptly react to any unexpected circumstances during the divorce, or begin the divorce proceedings without delay.

By obtaining a personal loan, you will be able to obtain the legal counsel of your preferred attorney even if their rates are more than you can usually afford. Having suitable, competent legal representation can improve the outcomes of the divorce for you.

If you are going through a battle in court due to divorce disputes, prompt legal support and guidance are even more essential and beneficial. If you need fast funding for divorce-related expenses, consider how you can benefit from a personal loan.

Keep shared assets intact

By obtaining loan funds to pay for divorce-related costs, you can keep your shared assets intact during the divorce. That means that you can avoid potential legal issues and arguments over asset division.

Benefit from simplified repayment terms

Personal loans come with clear repayment terms and schedules. The interest rate is typically fixed, allowing you to more easily plan your finances both during and after the divorce.

Typical criteria lenders use when making loan decisions

When granting personal loans, lenders consider various factors, including your financial stability and creditworthiness (how suitable you are to receive a loan). Exact requirements vary from lender to lender. Here are the standard criteria used by lenders to decide whether to give you a loan:

  • Credit score: Your credit scores are measures of your creditworthiness and credit behavior. It is damaged by numerous factors, such as late payments and loan defaults. The higher your credit score, the more likely you can obtain a loan with favorable rates.
  • Income stability: If you have a stable source of income, you will be more likely to receive a large loan amount.
  • Loan purpose: If your loan is for a divorce, it is important to share this information with the loan provider. That way you can avoid any issues later on during the loan tenure.
  • Desired loan amount: Your credit score can affect what minimum and maximum loan amounts are offered by a lender.
  • Debt-to-income ratio: Your debt-to-income (DTI) ratio is a percentage showing how much of your income goes toward existing debt obligations. For divorce loans, lenders may consider the potential of new obligations, such as spousal support and child support.
  • Collateral value (when applicable): Some personal loans are secured by collateral. These loans are riskier for the borrower since the collateral assets may be repossessed by the lender in case of a loan default. However, secured personal loans are relatively easier to obtain and may have lower interest rates.

Benefits of using personal loans for divorce-related expenses

Speedy funding

Personal loans grant approved borrowers quick funds. If you’re in need of rapid funding for divorce-related costs, obtaining a personal loan is one of the most convenient and fast strategies. With speedy funding, you can also gain prompt access to legal representation, able to hire an attorney as soon as possible.

Easy application process

It’s relatively easy to apply for a personal loan, whether in-person or online. The typical application process requires you to provide your personal and financial information so that the lender can assess your creditworthiness and financial standing.

Having an easy application process means that there is one less item to worry about during divorce.

Fixed repayment terms

Personal loans come with fixed repayment terms, which can be a relief during uncertain times. With fixed rates and clear repayment schedules, budgeting for and financing divorce costs can be simplified.

The loan tenure (duration of your loan) will be designated on your loan agreement, and you can negotiate for a different tenure if necessary. You will be expected to repay the borrowed loan amount plus interest by the end of the loan tenure. The typical loan tenure ranges anything from one year to seven years.

Less emotional stress

While friends and family can provide invaluable support, borrowing from people you know can create emotional complications and additional uncertainty. It can be awkward or uncomfortable to agree upon repayment terms, especially due to the active divorce process.

Prevent impulsive financial choices

During a divorce, people may feel compelled to make hasty financial decisions. For example, assets may be sold significantly below value, either to be quickly eliminated or to pay for the various divorce costs. By taking out a personal loan for divorce, you won’t need to sell your assets or dip into your savings, which may prevent impulsive financial choices.

No collateral

Most personal loans don’t require you to put up assets as collateral. This can make the borrowing process simpler since you don’t have to worry about asset division to take out the loan.


Key points to consider taking a personal loan during divorce

Since any financial decision during divorce proceedings can create rippling, long-lasting effects, it’s important to consider the benefits and drawbacks of taking out a personal loan before signing an agreement. Here are a few key considerations to keep in mind.

The extent of divorce-related costs

It’s critical to assess the full extent of your divorce-related costs. Consider the various types of fees you will be charged, such as for legal counsel, mediation, and court procedures. If your divorce involves no major contested issues, it may be easier to estimate your costs.

However, contested divorces can seriously drain your finances since resolutions are hard to reach. Here are common disputes that prolong divorce proceedings, making them more expensive.

  • Alimony
  • Dividing assets
  • Child support

The total cost of borrowing

Obtaining a personal loan comes with various costs, such as underwriting fees and accumulated interest. Before taking out a loan, calculate the total cost of borrowing so you have a clearer idea of how the debt will affect your finances. Make sure you are aware of the annual percentage rate (APR), which is a percentage that indicates your total cost of borrowing in a year. The APR must be disclosed by the lender before you obtain a loan.

The APR is determined by various elements, such as:

  • Discount points
  • Interest rate
  • Application and underwriting fees

Note that you should also be aware of any penalties you might incur, such as early repayment penalties and late payment penalties.

Your post-divorce financial health

After a divorce, your financial standing and repayment capacity can change significantly. It’s important to evaluate whether you will still be able to make the loan repayment terms post-divorce.

Alternative financing methods

Before committing to a certain financing method like personal loans, it’s a good idea to think about whether other financing options may better suit your needs. Example alternatives include:

  • Borrowing from friends and family members
  • Attorney payment plans
  • Personal savings
  • Credit cards
  • Lines of credit
  • 401K loan

Potential pitfalls and challenges

Be aware of common pitfalls that borrowers encounter when taking out a personal loan for divorce expenses. Here are some key points to take into account when shopping around for a loan.

Loan transparency

Reputable lenders tend to be more transparent and reliable when it comes to conveying loan terms to you. More predatory lenders might lack transparency, resulting in costly misunderstandings for borrowers.

On the other hand, it is important for borrowers to be transparent about the loan purpose. If you do not truthfully tell the lender that the loan is mainly for a divorce, problems may arise later on. Transparent and consistent communication between the lender and borrower can help improve the loan outcomes for both sides.

Risk of debt

Divorces are already a challenging period of time. Make sure you think about the effects of accumulating debt while dealing with a divorce. The added debt burden may bring about financial complications and strain.

Credit score impact

If loan installments are not paid on time and regularly, your credit score could be damaged.

However, if you can consistently pay the loan installment every month without missing a payment, having an active personal loan can actually boost your credit score over time.


Key takeaways

Divorce often results in a profound impact on the lives of the involved parties. You might find yourself in a new financial and emotional crisis. During such challenging times, it’s important to make sound financial decisions.

If you’re facing challenges with financing the divorce process, it could be beneficial to take out a personal loan for various divorce-related fees. Before making the decision of how to afford a divorce, try to balance your immediate needs with your future stability.

Resources and further reading

Having a trusted loan provider can help you secure positive borrowing outcomes. Here are examples of lenders with good reputations:

In addition, it’s also advisable to seek out various resources, such as legal advice platforms, counseling services, and anecdotal support. Staying isolated can aggravate the turmoil experienced during the divorce process.

About The Author

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Ru Chen

Content Writer

Ru Chen is a content writer with several years of experience in creating engaging and well-researched articles. She mostly writes about business, digital marketing, and law. In her free time, she can be found watching horror movies and playing board games with her partner in Brooklyn.

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