What is Canadian Divorce Financing?
Canadian Divorce Financing (CDF) is a loan option specifically designated for people who are faced with a divorce but lack the funds to be able to pay for the necessary legal assistance. An individual can obtain CDF despite a low or non-existent income, and/or a low credit score.
Who might benefit from Canadian Divorce Financing?
Oftentimes in a contentious divorce scenario, one partner has access to liquid financial resources (spendable cash) while the other does not. This can occur when one spouse has spent much of the marriage working outside of the home and supporting the family financially, while the other spouse has consistently provided childcare and/or homemaking services (cooking, cleaning, laundry, etc.).
In this situation, the spouse who has contributed from within the household may not be able to access the necessary funds to retain a lawyer. This problem can be exacerbated if the income-earning spouse is hiding assets. It is imperative, however, that both parties to a divorce have the benefit of independent legal advice.
The less-affluent spouse might first turn to friends and family for the retainer funds. Traditional bank loans or lines of credit may be available as well. In the event that neither of these methods is fruitful, Canadian Divorce Financing may be a valid option.
CDF is a type of financing based solely on a spouse’s share of the total home assets. This means that despite having no income or a low credit score, anyone can apply for CDF as long as his or her family unit owns as marital property: equity in a home, pensions, RRSPs, stocks and bonds, or other investments. The financing is arranged as a percentage of that spouse’s fair share of the matrimonial and other joint assets.
Which expenses are covered by Canadian Divorce Financing?
Most of the financing a spouse receives through CDF goes toward the legal fees associated with the divorce process. This includes the actual hours billed by the lawyer, but can also include ancillary legal services such as private investigators, certified divorce financial analysts, forensic accountants, child psychologists, and any other services that may be required in order for the lawyer to effectively advocate their client’s matter.
Day-to-day expenses don’t cease to exist the moment a couple decides to file for divorce, and CDF funds are designed to help cover those costs as well. A portion of the financing can be designated as a monthly “allowance” to help with mortgage payments, healthcare, and other items or services essential to the running of a household and/or the raising of children.
How and when do I need to repay a loan from Canadian Divorce Financing?
Repayment of a loan from CDF does not begin until the divorce has been finalized. In Ontario, a divorce is finalized once a judge has granted a divorce order. It is not necessary for the parties to have received a Divorce Certificate in order for the divorce to be finalized.
What are the advantages and disadvantages of using Canadian Divorce Financing?
Asking friends or family for money to fund a divorce can be embarrassing, and can often come with hidden (or overt) strings attached. CDF can allow a low-income or no-income spouse to finance his or her divorce with a certain measure of independence, privacy, and dignity.
By using CDF, a spouse can avoid re-allocating assets, and withdrawing funds from RRSPs or other investments at greater costs. CDF can also negate or lessen an impact on that spouse’s business finances.
CDF can be obtained without any income verification, and usually without a personal guarantee. Furthermore, there exists the ability to borrow more funds from CDF as one’s case progresses, if necessary.
In terms of disadvantages, interest rates on any loan obtained through CDF will likely be higher than those for a regular bank loan or line of credit. CDF, however, may be available to those who would not qualify for a traditional loan, making it the best and least-disruptive option in many circumstances.
Canadian Divorce Financing: Where do I start?
Information about CDF can be found at www.canadiandivorcefinancing.com or by calling toll-free (844) 355-3863.
To begin the process, contact a family lawyer as soon as possible to set up a consultation, during which you will explain your circumstances, desired outcome, and the fact that you would like to use Canadian Divorce Financing.
Contact CDF to obtain and fill out their form authorizing your lawyer to act and receive funds on your behalf. Your lawyer will then gather all of the relevant financial information and documents and provide these to CDF.
CFD will send financing documents to your lawyer for you to sign. The funds are then sent to your lawyer to be held in trust for you, to pay for legal fees, living expenses, and special disbursements.
How to find help:
Do you need legal advice? Get help from divorce lawyers who are trained to help you navigate through the whirlwind of paperwork and emotions that come with deciding how to proceed. Our lawyers can give you independent legal advice on separation agreements before you sign them, and explain how they will affect you.
Tailor Law Professional Corporation offers a free thirty-minute consultation during which you can speak to a lawyer about your situation. Our family law lawyers are happy to sit down with you and discuss your legal issue. We encourage you to meet with one of us, and we’ll see how we can help. We can talk through your situation, outline your options, and figure out your next steps and the best way to move forward. Give us a call at 905-366-0202 or book online.