UK Women Face End of Divorce Loans
News from the UK in the Daily Mail reports that women dealing with paying for a divorce are now facing a money crisis of sorts with the availability of divorce loans shrinking dramatically due to the financial uncertainty spread across the current global economy. Unhappy English housewives used to be able to get loans to fund their legal counsel and other related divorce costs through the banks. Now due to the current financial squeeze, many divorce lawyers in the UK now report that most of the banks have either terminated their litigation loans altogether or hiked the interest rates following the 2008 global economic downturn.
Some banks appear to have dumped short-term divorce loans completely, while others are employing stringent new lending criteria or charging higher interest rates between 11 and 17 per cent a month in order to discourage even the wealthiest clientele from trying to finance their breakups. The situation has gotten to the point where even women with wealthy husbands have been forced to look toward charity in order to pay for their living costs during the period of separation leading up to a divorce. One UK law firm reported a tripling of the number of cases where the women involved have turned to family and friends for funds in just the last two years alone.
Because the banks have started to demand interest rates on divorce loans at around 17 per cent (ordinary personal loans in the UK are at around 10 per cent a year) before they agree to lend, some borrowers are now being forced to sign a contract agreeing to let the bank manage any assets that may arise from a divorce settlement. In what looks like an attempt to make sure the debts are cleared immediately, other banks are only agreeing to divorce loans when there is significant cash or property to be split between the divorcing couples.
As some lawmakers and attorneys have noted, many women trying to cover the costs of a divorce often having no income or assets of their own. This makes them even herder hit by the lack of litigation loans they had previously relied on. Many UK women now find
themselves caught in a grey area where they cannot get their spouses to pay their legal costs, they don’t qualify for legal aid and they haven’t got a way to afford legal fees themselves. The result is that their family members and friends are the only sources of financial relief they can turn to.