Financial Remedy Proceedings and Funding Your Divorce

What is a financial remedy?

Financial Remedies (formerly called ‘Ancillary Relief’) is what lawyers call the process where the court looks to determine how fairly to distribute assets between former spouses or civil partners following a divorce or dissolution of the civil partnership. Here the court can also decide whether or not there should be ongoing maintenance payments. Financial Remedies applications only apply to married couples or those in a civil partnership who are in the process of getting, or have got, a divorce. However, if you are unmarried but have children together you still may be able to make a claim against the other parent for Financial Provision under Schedule 1 of the Children Act 1989.Reference: http://thejusticegap.com/adviceguide/2014/04/30/family-law-divorce-finan…

Divorce proceedings or mediation?

There are an ever increasing number of people getting divorced. There is also an ever increasing requirement for those couples to try and resolve their differences by way of mediation, mainly because it helps to retain an amicable relationship and it assists in keeping costs down. What if mediation is not for you and why mediation might not be for you?

Mediation does not work for all parting couples. Sometimes there has been behaviour within the relationship which makes it in appropriate. Sometimes however there is just a worry that there is an inequality of bargaining power. A typical example would be where one party has been a very successful provider throughout the marriage, running the family finances and making all decisions regarding their money. The other may have been the home maker and whilst making a significant contribution, a contribution of a different type. We all know that whatever the nature of your contribution it will be recognised by the divorce courts but often the problem is not what the court will do but how to get to that stage.

You may have a spouse who you know is lying about his or her wealth. You may simply never have taken an interest in the family finances and do not know where to begin in asking the right questions. You may feel overwhelmed by the fact that your spouse is a successful businessman/woman and has the ability and knowledge to cover his or her tracks and “catch you out”. He or she may have transferred assets to someone else and you feel they may have done so to reduce what is available for division. There are also cases where there is a point of law which is unclear and it is therefore difficult to reach agreement without a judge deciding on that point of law. For all of the above reasons and many more you may not feel comfortable with mediation and may feel that it simply would not lead to a fair or reasonable outcome and that you and perhaps your children would suffer financially.

How to issue financial remedy proceedings

If you find yourself in the above scenario you are likely to be advised that the only option is to issue financial remedy proceedings. This simply means that you are asking a Judge to decide how the assets of your marriage should be divided because you cannot agree for one or more of the above reasons. At this stage you may find yourself in a position where your spouse being the more confident and experienced business person has access to the family finances and can use these and his contacts to obtain expensive legal advice to assist him. Where does that leave you – you may not have access to any money at all. You may have no income and all joint money may be tied up in the house or other assets which you cannot liquidate because they are in joint names.

This is a stage at which people often decide they do not have the resources to go ahead and must accept what is offered or just try and negotiate as best they can but ignore the fact that assets may have been hidden away because you simply do not have the money to pay expensive legal fees. This does not have to be the case. In a situation such as this it is likely you would be entitled to some settlement. It is just a case of not knowing when it might reach you and how you finance the legal advice in the meantime. It is important to be honest and speak to your solicitor at this point. If you carry on and pretend you can pay them but then get half way through the proceedings and run out of money the result may be catastrophic.

It may arise at a stage where you desperately need representation at a very important stage in the matter. If you cannot pay because you have not addressed this at the outset then the result may well be that you have to go it alone at the worst possible stage of the matter.

So how do you avoid getting into this position? The answer is having this discussion at an early stage. Discuss it before the proceedings are issued. If you do not have the money you need to take the matter through to a conclusion and discuss this at the outset. The court will in certain circumstances provide an order where money from the matrimonial resources is made available to meet your legal fees.

The court may be persuaded to order your spouse to pay you a monthly sum of money by way of income to meet payment of your legal fees. These orders are not made as a matter of course so there will be some work to do to prepare for such an application. The court will want to see a detailed estimate from your solicitor as to what the fees will be to each stage of the proceedings. Your solicitor will therefore have to have a fairly detailed knowledge of the case and your joint assets before any such application can be made. You will need to finance this work to get to that stage but it will be much less than the cost of the overall proceedings. You will also need to provide evidence to the court that making this application is your last resort.

You must show that you have no money which you can access – you can’t for example retain a policy and say you do not want to surrender it. You must show that you have exhausted all avenues of finding the money from another source. Your solicitor will need to state that they are not prepared to wait to be paid (not unusual because they have a business to run and can ill afford to do that). You will also need to show that you have applied for and been declined loan facilities. The likelihood is that if you go to a high street lender because they do not know what is likely to happen and when they are likely to get paid they will probably not entertain you. In any event they will want monthly repayments which you probably can’t afford.

The better option is to look at specialist family litigation loan providers. They are far more likely to lend you the money because they have knowledge of how the process works and what you are likely to achieve at the end of the proceedings. They will want security in a lot of cases and you will need to sign to say that your solicitor will pay them from your eventual settlement but they do not seek monthly repayments, which means if you have no income you can still obtain such a loan. The fact that this type of loan is now much easier to obtain means that succeeding in an application to the court to obtain money from the matrimonial resources or your spouse’s income to pay your legal fees are less common – albeit not impossible.

Divorce settlements: What the courts will consider

So how does this affect your eventual settlement? You may of course say that you need the entirety of your settlement to meet your housing needs after divorce. That may well be true and if it is, your case is likely to be based on your future needs. When the court comes to assess those needs at final hearing they will look at what money you need to provide you and the children with a home. They will take into account that before buying a home you will need to repay any debts you have hence will in many cases provide you with sufficient to meet payment of your legal fees and then sufficient to purchase a suitable home.

Experienced divorce lawyers to advise you on funding a financial remedy claim

If you decide not to take up a loan from a specialist lender but borrow money from your parents or other family members speak to your solicitor about this. You need to make sure there is a firm agreement between you as to repayment terms. There is a tendency for the courts to adopt the stance that your family will not ever pursue you for the money so they do not need to make funds immediately available to repay them. If you are going to do this try and reach agreement with your spouse that whilst you will obtain money to fund the divorce proceedings from this source you will require his or her agreement that it is recognised the funds will have to be repaid out of your settlement or maybe even out of the sale proceeds of the home or other assets.

You will see from the above that there are many options available to fund a financial remedy claim. These options do not work in every case and litigation loans are expensive but the circumstances which lead to your initial view that you are not comfortable in attending mediation or trying to agree a settlement are the exact same reasons why you should not be settling for an agreed order without investigating the concerns you have.