Personal loans can be a feasible option to fund legal expenses such as attorney retainer fees. Many lawyers will not begin working on a case until the client deposits money into an escrow account.
Clients with a bad credit history or low FICO and Vantage scores often find it more challenging to qualify for a loan. They might benefit from a two-pronged strategy: get their credential before a vast subprime lender network, and demonstrate sufficient income.
Meanwhile, people who need financing to pay a divorce or criminal defense lawyer have unique situations warranting special considerations.
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Loans for Legal Fees Bad Credit
Personal loans for bad credit are often the right resource to finance legal fees when your borrowing record show tarnish. People with FICO scores below 550 because of adverse history on their consumer report face low approval odds, making it harder to hire a lawyer.
However, clients with lousy credit history can overcome their weak borrowing credentials and find a lender willing to say yes using two strategies.
- Present your profile to a vast network of subprime lenders online
- Demonstrate sufficient income to handle the monthly payments
Online Lenders
It’s easy to get a personal loan online (Sponsored Link) to pay for legal fees – even with lousy credit history. When your approval odds are low, presenting your credentials to a substantial network of subprime lenders via a single web-based form boosts your chances through volume.
Subprime finance companies target consumers with low FICO scores because of adverse history on their consumer reports (bankruptcies, charge-offs, repossessions, etc.).
Be prepared with these elements to improve your approval odds further so you can hire an attorney to fight for your rights.
- Driver license number to verify your identity
- Bank routing and account numbers to facilitate payment
- Employer name, address, and phone number
Income-Based
Income-based personal loans are another appealing legal fee financing option for clients with lousy credit records. You can make up for low FICO or Vantage scores and hire a lawyer by showing a strong employment history and enough regular earnings to handle the projected monthly payment comfortably.
Subprime lenders often give greater weight to your Debt-to-Income (DTI) ratio, a measure of loan affordability. They are more likely to approve an application from a person with past bankruptcies, repossessions, and charge-offs when the DTI is in a manageable range.
DTI = monthly installment payments/monthly income
Loans for Legal Retainer Fees
Personal loans for legal expenses are often ideal financing options for retainer fees when you can reliably estimate your case’s total cost. A retainer fee is money paid in advance before the lawyer performs any legal services.
Personal loans fit retainer fees well because of the one-time nature of both. They are installment contracts, which means that you borrow money once and repay the lender in low fixed monthly payments over a set period of one to five years.
However, fixed installment contracts are not always the best idea in cases where your attorney might bill for hourly charges above the initial retainer.
Divorce Fees
Taking out a personal loan for divorce legal fees entails special considerations. A family law attorney will typically require a retainer upfront but could ask for more money when negotiations become hostile due to the super-charged emotions and contentious issues.
- Child custody and visitation rights
- Division of marital assets
- Child support and alimony
The one-time nature of a personal loan fits well with uncontested divorces but might be the wrong choice for protracted proceedings where one spouse has less financial muscle than the other.
New Chapter Capital offers divorce financing based on the projected settlement and provides resources for living expenses, legal fees, expert forensic accountants, etc. You do not make monthly payments. Instead, you make a single lump-sum payment from your share of the divided assets.
Criminal Defense
A personal loan for criminal defense legal retainer fees makes sense for defendants who can work or drive while fighting misdemeanor or felony charges. In other words, you are not in jail, and your driver’s license is active.
- Lenders require a valid source of income and will ask for your employer’s contact information so they can verify that you are working – an inevitable rejection while incarcerated
- Lenders also require a valid driver’s license number and will check your motor vehicle record where a pending DUI might hurt approval odds further
A Home Equity Line of Credit (HELOC) taken out by a friend or family member might prove a better choice. Some defendants need to hire a top criminal defense lawyer for full trial representation replete with expert witnesses and need more money and flexibility.
A HELOC taps into a home’s equity and could potentially yield far more funding to finance an expensive criminal trial. Also, a HELOC is a revolving contract, enabling you to borrow more money as needed.