Divorce

Avoiding the High Average Cost of Divorce: 5 Financial Mistakes to Avoid

A divorce is an emotionally challenging and time-consuming process. It can also end up draining you financially.

Although there has been a decrease in the number of divorce cases in the U.S., the termination of marriages is still a matter of concern for many people. It’s important to understand the factors and mistakes that can drive up the cost of a divorce. The emotional toll makes it easier to miss the pitfalls that can leave you with severe, lasting costs.

The cost of a divorce might be the first thing on your how-tmind when you need to file through legal counsel to reach a fair settlement with your spouse. Realize, however, that your finances are going to take a hit whether or not you employ the services of a lawyer.

The average cost of a divorce depends on several factors. For example, divorce costs can vary greatly depending on the gravity of the disputes between you and your spouse, the state you live in, and the divorce lawyer you hire.

Filing a divorce through legal counsel in some court districts of Wyoming costs as little as $70, the lowest divorce cost in the U.S. The most expensive court process for getting a divorce or legal separation is in California.

The divorce costs vary greatly on a case-to-case basis, but there are three key costs to keep in mind when calculating the total cost of processing a divorce case:

  1. Divorce attorney fees – Most lawyers help with a divorce by charging a flat fee or retainer. Generally, the legal fees of a divorce lawyer range between $150-$250 per hour. In certain cases, attorney fees may go up to an hourly rate of $650, depending on the case’s complexity.
  2. The price of alternative dispute resolution – Alternative dispute resolution (ADR) is an attractive alternative to going through the court. The court systems are burdened by long delays, a lack of privacy, and huge costs. If it’s available to you, an alternative dispute resolution can be more cost-effective, fair, and quick. Nevertheless, both parties will still have to incur attorney fees for their respective arbitrators to have a binding resolution.
  3. Court costs – Because divorce is a civil matter, it is treated similarly to a lawsuit, where one partner files a suit, and it must be served to the other partner. The court fees vary depending on the state and the court you choose. However, the research conducted by LegalZoom confirms the cost of filing is around $300.

Let’s dive into a look at some average costs and financial errors to avoid during the process of separation.

Average cost of divorce: Attorney fees

Divorce invades your finances in the range of hundreds to thousands of dollars. This huge variation in the average divorce cost depends on aspects including filing fees, legal fees, and the state where you are filing the divorce through your divorce lawyers. Considering many factors like these, you can estimate the costs you will likely incur for the dissolution of your marriage.

According to a nationwide survey by the legal site Nolo.com, the average cost for a divorce attorney is $250 per hour. Most people pay an hourly rate between $150 and $350 for their divorce attorney for an uncontested divorce.

However, more important than the hourly cost is the number of hours you will need an attorney to work on your divorce. Nolo’s survey found that the average couple spent $12,800 on their divorce, which comes to about 50 hours at the $250 rate. The time that lawyers bill to their client will include preparing the documents, attending phone calls, and writing emails about the case. So the cost of a divorce will increase with all these factors.

Not every divorce requires a lawyer, but Neil Rambana, an attorney with Rambana & Ricci law firm in Florida, says, “If the parties cannot agree on child custody, support, or property distribution (assets and liabilities), then it is important to seek the advice and counsel of an attorney. Emotions are usually high, and processing these challenges may be distorted by the parties.” Rambana estimates the cost of divorce at $500 to $15,000, depending on the sophistication of the estate, length of the marriage, child support, and similar factors.

How much is divorce if no attorneys are needed?

It is always better if the spouse agrees. You can save attorney fees and handle your divorce with a mutual agreement without involving a divorce lawyer. Rambana explains that, typically, a couple who can amicably agree via a marital settlement agreement may avoid representation by an attorney. In Florida, for example, the courts provide all the documentation necessary to effectuate a dissolution of marriage without the need for an attorney.

If an attorney isn’t necessary, the paperwork, court filings, and other complications may still require you to seek alternative help and advice. Here are some less expensive options you might consider without incurring an attorney’s fees for your divorce:

Divorce mediation

Divorce mediation is the process of negotiating your divorce out of court with the help of a mediator.

Before going to trial, most courts will give you an opportunity to attend a mediation. Mediation allows you to keep your divorce costs down and save your time spent in court. It is still recommended that each spouse consult a divorce attorney as well. However, because the hours required of that lawyer will decrease dramatically, the billable hours will be much lower. Mediation costs can vary widely, but Mediation Matters estimates the average cost to be from $6,000 to $7,000.

Legal document preparers

If your divorce is uncontested, consider a legal document preparer (LDP). They will fill out the documents required for divorce, help you consider the available options, and once you decide on a direction, they file the required documents with the court. Divorcenet estimates the cost of hiring an LDP between $175 and $700 depending on whether or not you have children, where you live, and a few other factors.

Online divorce help

Couples who are in spousal support and seeking uncontested divorces can mutually agree on the decision to dissolve the marriage. Ideally, both individuals can come to an amicable agreement on issues like the division of property, child custody, and all other related issues. However, any couple who cannot reach a mutual agreement on all these terms is not qualified for an uncontested divorce online and needs legal advice for a contested divorce.

Many web-based divorce services in most U.S. states typically help you through the process of getting a divorce, from filing the divorce petition to procuring a divorce decree, from the comfort of your home. The cost of an online service runs between $300 and $1,500.

Average divorce cost: 5 major financial mistakes to avoid

The decision to get a divorce brings with it financial burden and risks, especially in the case of a contested divorce. An uncontested divorce or a collaborative divorce can save you time and money. Rambana says the best way to save on a divorce is to work everything out with a mediator, if possible, and avoid a trial. “If you go to trial, that could cost much more because your attorney will need to depose and prepare for a contested matter.”

Unfortunately, you may not be able to avoid a trial, depending on your spouse and the contentiousness of the divorce. So, here are five other mistakes to avoid:

1) Don’t underestimate your expenses

Be precise when figuring out your monthly income and expenditures. It is recommended to analyze your monthly bills and create an accurate budget accordingly. You also need to take inflation into account to ascertain your future living expenses. This will help decide things like alimony and child support.

2) Don’t make financial decisions one at a time

To arrive at a bigger picture, you will need to consider the overall financial aspects to get a reasonable settlement. Looking at each asset or source of income separately will not show you the big picture considering important issues such as taxes, inflation, and more. Although it may be hard to think about money while going through a divorce, you will only get a fair settlement if you have a complete picture of your assets and sources of income. This will enable you to determine how and when to divide your assets.

3) Try and pay off unsecured debt before the divorce is final

Whether in a contested or uncontested divorce, it is good to have a mutual consensus to determine your options for your outstanding debt. Consider interest charges, installment patterns, and your total amount of debt to choose the best option for handling it. If you’re able to pay off this debt before the divorce, it will make the situation much easier for you and your spouse.

4) Make sure you get your portion of your spouse’s pension

While figuring out your portion of your spouse’s pension, you may opt for either a one-time-payout or a shared-life-payout. Figure out what they are worth with the help of an actuary because these retirement plans have value today, even if you can’t access them until retirement.

5) Secure alimony or child support with insurance

This will ensure continued alimony or child support payment in case of your spouse’s death or disability, making sure you still get paid the amount of insurance claim.

Average cost of a divorce: Get help financing your legal fees

Many people choose to put divorce off because of how expensive it can be. But why stay trapped in an unhappy marriage when you have options to pay your legal cost? While it is important to consider the various options for paying lawyers’ fees, here are some prominent ones to choose from:

A personal loan

Did you know a personal loan is one of the most popular options people use to finance a divorce? It’s easy to find out if you qualify and what you qualify for. All you have to do is answer a few simple questions, and you’ll receive pre-approved loan offers from various lenders without hurting your credit score.

However, different personal loans come with different rates, fees, and requirements, so check out what are the best personal loans for you. You may be able to compare each lender side-by-side to find the best one of the lot.

Using a credit card

Paying a legal fee with your credit card is an option, but only if your credit scores qualify. You may use an existing card or apply for a credit card in your name. However, consider the high-interest rate these cards carry. It is important to have the resources and better financial stability to pay it back without any lapses.

Opting for a payment plan

Most attorneys charge through payment plans for settling divorces. It is a good idea to talk to your attorney to set up a plan to pay your costs in smaller portions. You might also pay the initial retainer to start the process and later pay in monthly installments.

The final takeaway

Divorce, especially a contested divorce, is likely to be an expensive proposition. Making unforced errors during the divorce process will only intensify your uncertain financial state and make the whole experience much more stressful. The potential mistakes you can commit during the divorce process will have long-lasting impacts on your financial stability.

If you are preparing for a divorce or are already in one, get help from a financial advisor who can guide you to stay financially organized. Be aware of your different options, and be prepared to negotiate terms to make sure you can start the next chapter of your life on a more stable footing.