Divorce is both an emotional and financial challenge. Fortunately, financing is available to help divorcing individuals to cover the cost of a marital breakup, including legal costs, if needed. Here are a couple of viable ways of obtaining funds to support divorce-related costs in Illinois.
Retirement accounts and life insurance policy possibilities
Individuals who need financing during divorce may benefit from taking advantage of 401(k) loans. The interest rates on these loans are usually lower than those on personal loans. However, individuals who are interested in taking out these loans will require their spouses’ approval before they can take them out. In addition, any 401(k) loan balances must be paid back within two months of leaving one’s employer to avoid taxes or penalties.
Divorcing individuals can also take advantage of loans associated with their whole life insurance policies. The benefit of this type of loan is that it is tax free and usually has a lower interest rate compared with that of a personal loan. These loans also are not reported to credit bureaus, so they will not negatively impact the borrower’s credit scores. However, any loan taken out will reduce the amount of death benefits that will be left to the borrower’s beneficiaries.
How an attorney can help
Navigating the financial aspect of divorce can understandably be overwhelming, especially when financing is part of the equation. However, an attorney can help a divorcing individual to make informed financial decisions related to asset division and debt distribution, for example. An experienced Illinois attorney’s focus is to make sure that his or her client’s financial best interests are protected long after the divorce has been finalized.