Financial Tips For Couples Separating During COVID-19
The Maryland courts have been closed for over a month now, and do not plan to reopen before June 5th, except for emergency matters. For couples separating during COVID-19, the judges are hopeful that alternative dispute resolution methods like mediation or a Collaborative Divorce process will be utilized to reach a resolution outside of court in order to avoid the major backlog in the judicial system.
In mediation, you can pay as you go, using one neutral professional to help you address the issues that need to be part of your comprehensive settlement. If you are not comfortable advocating for yourself, then you can opt for a Collaborative Divorce, where each party has his/her own attorney sit in the 4-way meetings, but the two attorneys are committed to working as a team to reach a resolution outside of court. If outside experts are needed, like a financial neutral, divorce coach or child specialist, the family agrees to hire one that is mutually agreed upon.
Litigation should always be an option of last resort (at least in my opinion) particularly for families with children, not only because of the expense and time involved, but because you will most likely destroy any possibility for preserving goodwill and being able to co-parent amicably in the future.
When choosing the process that you would prefer, you also need to look at what is a realistic budget. How much do you have in savings or what can you borrow to cover legal fees and court costs? In some cases, families that lack access to cash have borrowed from their home equity or 401(k)s to finance a divorce, or they are fortunate enough to have a trusted friend or relative advance the funds needed.
But what happens if someone lacks sufficient income, credit or assets in his/her own name to pay for the divorce process? This person may need to look into divorce financing, which is a short term loan based on a conservative prediction of what an individual will get from the marital assets when the divorce is finalized.
Back in 2013, Good Morning America did a segment on divorce financing featuring “The Fairy Godmother of Divorce.” Nicole Noonan and I did not know each other back then, when I was asked to weigh in on the importance of this service. Since then, I have been able to refer her clients in need of this loan. This week, in light of the COVID-19 crisis, I asked her to do a quick interview explaining the divorce financing process. I apologize in advance that we did not have the technical assistance of ABC to help us look as glamorous as we did last time we appeared on air together, but we did our best while sheltering in place.
Hope you find this interview helpful, and stay tuned for my next episode on YouTube, where I have a limited series of talks “Timely Tips For Families During COVID-19.” Check out my talk with Nicole: