Divorce can be messy with the roller-coaster ride of emotions, the legal fight over finances, child support, and dog custody, as well as the divvying up of mementos from the marriage that did not last.
For married couples who own a small business, a divorce can be particularly challenging. Even though millions of dollars may be at stake, one spouse may be in the dark about the finances of the family business. While lengthy divorces can be expensive, does that mean that you should not fight to get what you are entitled to?
Stacey Napp, the founder of Balance Point Divorce Funding, doesn’t think so. Her company just might lend you money to fight your soon-to-be-ex in court.
Balance Point is something of a ‘general contractor’ in a divorce. If the company chooses to provide you with litigation funding, the proceeds may be used to help pay for hiring attorneys, forensic accountants, investigators to uncover fraud and hidden assets, and even reasonable living expenses. In exchange, her company negotiates a percentage of the client’s financial resolution in the divorce.
Not surprisingly, Napp came up with the idea for her divorce financing business after going through her own expensive, protracted divorce. Like many spouses, she found herself in a situation that put her in a tight spot: drawn-out litigation seemed designed to simply weaken her negotiating position. After spending two years in court, she signed a divorce settlement with her husband, only to learn that he engaged in “intentional material omissions” about the real value of his business. It was a lot greater than he originally disclosed.
Many successful entrepreneurs take an approach that, when you have lemons, make lemonade. That seems to be a key component of Napp’s approach to helping spouses find the real value of their marital assets.
Napp has considerable collections and asset recover experience, having previously co-founded a company in the 1990s that uncovered, found, and collected Resolution Trust Company assets.
Of course, some limitations apply:
- Marital assets must be at least $2 million to roughly $15 million
- The married couple must not have a written prenup or other marital property agreement in place that could limit a legal entitlement to marital assets
- The party seeking help in the divorce must need at least $200,000 to pay divorce professionals (lawyers, investigators, accountants) and have reasonable living expenses.
From a business perspective, a divorce funding firm has an interest in making sure the client gets the best possible financial outcome in their divorce. A prospective client who takes a ‘scorched earth’ approach to divorce litigation will not likely to be a good match.
Parties in a divorce need to get on with their lives. Helping a client make sure that she has the financial wherewithal to do so is a great reason why a firm like Napp’s can fill a previously unmet need and legal void. When a divorce case has a client with good cause to look for potentially hidden assets, this approach seems perfectly logical. We anticipate that many states will see similar divorce funding firms like Napp’s in the future.