Monday, 24 January 2011

Loans available to help with divorce costs

It seems that with the probable demise of public funding in family related cases that more and more people will be looking for funding options.  In last week’s FT.com it was reported that the Co-operative Bank has begun offering loans to divorcees to help pay spiralling legal bills.

The article (http://bit.ly/dO6ZHI)  read:

‘The bank, which has its headquarters in Manchester, has entered an agreement with DWF whereby the law firm will introduce well-heeled clients to the bank so they can be considered for a loan.

It has proved a popular arrangement with those who depend on incomes from their estranged spouses, ensuring they can get access to lawyers.

Some private banks already offer so-called matrimonial dispute loans, but lawyers say many have pulled back in recent months and have tightened their lending policies.

David Pickering, head of family law at DWF, said: “The loans are still out there but private banks are increasingly demanding collateral and security. This is often difficult for an ex-wife when the family home, for example, is in joint names of both parties.”

The Co-op loan is unsecured and will be cleared once the divorce settlement is made. As a law firm, DWF is not licensed to provide loans and the scheme is purely a referral one.

Stephen Buckland, senior manager at Duncan Lawrie, a Belgravia-based bank, provides these types of loan, ranging from £25,000 to £250,000, and says demand is growing.

“I am aware that some private banks have tightened up their lending and at least one has pulled out altogether. We have been getting busier as firms of solicitors become aware we offer these loans and we have picked up a number of clients through personal referrals,” he said.

Suzanne Kingston of Dawsons solicitors said she believed funding was still available to clients but on less favourable terms than before the credit crunch.

The Co-operative Bank is part of the supermarket-to-financial services group that is Britain’s biggest mutual retailer. The group itself is gearing up to offer legal services to non-members when the UK legal market opens to greater competition this year and allows new entrants.

Paula France, account manager at the Manchester corporate banking centre of the bank, said: “This is an extension of our longstanding relationship with DWF, where we are seeking to provide facilities to their clients with a view to making the decision of choosing a law firm much easier.”

The number of “big money” divorces has been growing in recent years with estranged spouses winning big pay-outs.

These include the £48m awarded to Beverley Charman after 28 years of marriage to John Charman, the insurance magnate, and the £24m awarded to Heather Mills on her divorce from Sir Paul McCartney’.

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