Borrowing to Cover Legal Costs

Borrowing to Cover Legal Costs

Apr 07

Whether you are going through divorce or complex litigation case, legal costs add up to the point where many are forced to look into different borrowing solutions. There are various options to consider, from traditional banks and unions to specialist lenders. The choice of lender depends on the fees involved, your income and credit score, and whether you need urgent cash to pay expenses.

Traditional Lenders

A bank loan with a short term is one way to cover legal costs. Legal aid is not offered to meet the cost of dissolution or divorce but you can apply for a personal unsecured loan ( to cover court, solicitor, and other fees. This will add to the legal costs, and many consumers end up paying thousands of dollars. To this, it is important to shop around and find a low-cost loan with no prepayment penalties.

If you are a union member, you may visit your credit union and inquire about different options you have. Similar to banks, your credit score is one of the most important factors to measure risk.

Third Party Funding Services

There are funding services that offer loans to borrowers involved in commercial disputes, personal injury cases, structured settlement, workers’ compensation, and civil rights cases. Some borrowers resort to title loan companies and payday lenders but they charge higher interest rates. In some cases, the rate, term, and repayment schedule are heavily weighted, and this is a warning sign. On the good side, lenders promise quick approval and only require that borrowers have an active checking account and present a photo ID or driver’s license and proof of employment. If you need cash over a short period, this is a good starting point because traditional lenders request more documents and information and take more time to process your application. Find list of lenders here.

Peer to Peer Lending Services

Peer to peer loans are another option to cover expenses, and lending services often advertise lower fees than unions and banks. They also claim that they are able to offer competitive rates and terms because they are not standard operators. Unlike banks, they don’t pay salaries, utilities, and other expenses. Some peer to peer lenders require a cosigner or collateral to guarantee prompt repayment while others offer unsecured loans. Keep in mind that not everyone gets approved. Lending services also use scoring systems to assess creditworthiness and risk. Some will be willing to offer a loan to a borrower with a score of about 660 but many require a higher rating. Check lenders here:

Credit Card Companies and Introductory Rates

Using a low-interest credit card ( allows borrowers to cut down on interest payments. Better yet, you may want to use a card with an introductory zero rate to meet legal expenses. The introductory offer is usually valid over a period of 6, 12, or 18 months. Avoid department store and specialty cards with heavy interest rates unless you have exhausted all other options you have.

Other Options

One option is to cover legal expenses once a financial settlement has been reached. Some law firms offer this option. You may also think of valuables to sell or stuff you no longer need. You may also ask your friends or family for a short-term low-cost loan to cover the expenses.

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