Listen: How can I pay for my separation?

Kate Russell

So many Australians are feeling the pinch financially right now, and if you’ve separated, you’re even less likely to have a lot of disposable income or savings available with all the extra costs of setting up two homes. Welcome to The Separation Guide Podcast. In this episode, I learn about one way to unlock money to pay for separation.

Before settlement, it’s common to find that all your assets including property, savings and belongings, are tied up and in joint names. It’s not always easy to access that money. Unfortunately, some people just put legal advice or representation into the too-hard basket because they don’t know how to pay for it.

Perhaps you’ve separated, and you’re struggling to cover a mortgage plus rent on a second home, and the thought of paying professional fees seems out of reach. Possibly you are relying on government benefits, spousal maintenance or child support to cover your expenses, and the last thing you can do is to ask your former partner to contribute to your legal costs. Maybe you are not earning enough, or you don’t have the credit score to access a traditional loan.

Did you know that there is a type of finance that can help you unlock some of the money that is tied up in property? A type of finance that doesn’t look at your situation right now, but instead looks at your current assets and considers your position after you settle? It’s called family law finance.

To explore the ins and outs of this type of funding, in this episode, I speak to Jack O’Donnell, co-founder and co-CEO of JustFund – Australia’s only finance provider set up specifically to support people going through separation and divorce.

I started by asking Jack about his background, and his motivations to found JustFund.

Jack O’Donnell

My first ever job in law was working as a paralegal at a family law firm in Sydney, and this is while I was studying law and was doing a whole range of pretty boring administrative tasks, but would also sit on the reception desk for a couple of hours a day. And I still remember answering phone calls every day from people going through separation who were obviously incredibly stressed and going through an incredibly challenging time, and I was amazed at how consistently they would ask questions around options for payment, whether the firm offered legal aid, or offered any flexible payment plans.

And really, it was just people venting about how concerned they were, about how they were going to access the right legal advice and the right support services to help them achieve that. The best in the fairest outcome possible. So I pretty quickly realised then, and this was only reinforced later, as I actually started practising law myself, that the system and the playing field can be really unequal. And this is especially the case for people going through separation. And it’s especially true for someone who might not be the primary income earner and someone who has had the most important job of all, which is being the primary care of children for the majority of their relationship.

I also realized when I started to dig into this a bit further, that banks and other traditional lenders really weren’t equipped to help someone going through separation that were really focused on things like income, employment history, credit score, things that just if you’re going through separation and you and you’re not the primary income earner, and if you have been the primary care of children, things, you know, you just might not score highly enough on in this kind of traditional sense of things to be able to get the help that you need.

So I was really fortunate to be able to meet my now co-founders who were equally passionate about solving this problem and getting people going through separation, just so much more options to enable them to really, you know, empower their financial future and set themselves up as best they can.

Kate Russell

So, Jack, what is the product that just one provides for people going through separation?

Jack O’Donnell

We provide financial assistance in the form of a really flexible line of credit to someone going through separation. And our line of credit can be used to pay legal bills. As well as related costs that are associated with your separation. So that could include things like mediator fees, property valuation reports, family reports, barrister fees and other support services to.

Kate Russell

And what kind of matter makes someone eligible for a loan through JustFund?

Jack O’Donnell

We’re repaid from the proceeds that you receive from your property settlement. So in order to be eligible for a JustFund line of credit, we do need to be a property matter involved. So in other words, if you’re working through how you’re going to divide up your assets with your former partner, that sort of that sort of property matter is one that would be eligible for funding. And if you do have a property matter, then we can typically also assist with the legal costs and other costs associated with your with your parenting manner as well. So unfortunately, if you only need financial assistance for a parenting matter, that’s something that we can’ assist you with today. We do need there to be to be a property element in your separation to be eligible.

Kate Russell

So, Jack, what kind of assets in the property split do you look at for eligibility?

Jack O’Donnell

So we’re really focused on particular assets and they are real property. So, homes or investment properties. The the parties might have sold property already, and the sale proceeds from that might be sitting in a conveyancers or a solicitors trust account. So we can certainly look at, look at those funds and that as an asset as well. Or you or your former partner might have a business and or, you know, or multiple businesses. And we can certainly look at businesses so long as they’ve been independently valued. So those are the three assets that we can focus on when we consider you for eligibility for funding.

Kate Russell

So a property in like a home fund sitting in a trust and then businesses that have a valuation. Okay.

Jack O’Donnell

Precisely.

Kate Russell

And so with that finance, how does that differ from a, say, a traditional personal loan or a mortgage, um, where you might release equity from a home?

Jack O’Donnell

People would be really used to this idea of a of a personal loan or a mortgage from a bank. And anyone that’s ever applied for one of those loans would recall probably providing information about your income, perhaps providing information about your employment. And also the the lenders really focusing on your credit score to determine whether you can borrow from them and how much you can borrow. Those sorts of loans also require borrowers to pay interest each month and principal as well. So family law finance differs quite significantly from that. It’s a much more flexible type of loan, and it’s very much tailored to someone going through separation.

So, as I’m as I’ve spoken about before, so many people that are going through separation might not have an income. Or if they do, it might not be an income that is great enough to be able to support a loan to pay legal bills. A lot of people, as I said, are the primary care of children and so may be only working part time or not at all. And a lot of people might never have applied for even a credit card before. And so, you know, credit score might not be something that is particularly strong.

So taking all that into account, rather than focus on those things, we very much focus on someone’s legal entitlement. So what you’re entitled to under the Family Law Act in Australia. And we can we can assess that because we are lawyers and we understand someone’s legal entitlement. And what we can do is we can use that to then provide you with some funds, which represent a small portion of what we think you’re going to be receiving once you do actually settle. The difference there is, it should be a much more accessible loan to someone going through this, this event in their life.

The other difference is that we don’t require you to pay any interest or fees or charges until you actually settle your property split and until you actually receive the proceeds, which would typically include some cash from that split. So you repay everything, typically in one lump sum payment at the very end. So hopefully really just reducing the financial stress and pressures whilst you’re actually getting the advice that you need. And while you and your former partner are agreeing to the split and how things are going to work, we’re hopefully just taking the stress and the uncertainty around how you’re going to pay away from you until you actually are in a position to be able to pay.

Kate Russell

Okay. So no ongoing repayments. One lumps up at the end only when you have access to funds to pay. And you mentioned that your team are lawyers. So, how does your team differ from the people you might speak to at a bank. And how do they assess your situation?

Jack O’Donnell

Yeah. So we’ve got we’ve got five lawyers in the team, three of whom are practising family lawyers. And what that means is, is that we’re really well equipped to assess every application on a case-by-case basis, and we’re really able to assess and take into account someone’s very unique circumstances. We very much review every application on its merits as it comes in. And really importantly, because we know what you’re going through can be so challenging. It’s very much a human service. You know, we want to be able to answer your calls if and when you have any questions or you want someone to speak to. And it’s very much about kind of working through and holding your hand through the application process for us to understand your circumstances and for us to be able to understand whether we can support you or not.

Kate Russell

So, Jack, because your team are lawyers and with family law experience, you’re looking more at the outcome of what that matter might be rather than the present situation.

Jack O’Donnell

Because we’re family law specialists. We understand entitlement under the Family Law Act. And we’re able to to to understand your circumstances, understand your assets and liabilities. And we’re able to come to our own independent view as to what we think you’re going to be receiving from that. And we can then use that to provide you with a small portion of what we expect you to be receiving, and you can use that to pay for your legal bills, to pay for the related costs and the other support services that you need to get to that settlement to get to the property split, hopefully in the most efficient manner possible, and hopefully in a manner that this has just been slightly less stressful because you haven’t been concerned about how you’re going to pay.

Kate Russell

But also in a matter where you’re getting professional advice and legal advice from from family lawyers and from from other professionals, rather than just kind of going it by yourself and not necessarily understanding what entitlements might be. Right?

Jack O’Donnell

Definitely. Definitely. Separation is is is complex and navigating that the legal process is is very complex. And I know The Separation Guide and the work that you do. I know you’ve done some some studies on this recently, which indicates that there are a lot of people out there choosing the DIY approach, the do-it-yourself approach to separation, and that might be a really good option for some people, but it can definitely leave people in a situation where they have agreed to something that ultimately is not fair and actually does not, does not provide or set them up for their future in the way that they should. And so I think certainly from our perspective, we certainly advise people to, to to get legal advice, to engage a lawyer or to speak to it, at least speak to professionals who understand the space so that you are as informed as you can be, and you’re making the best decisions possible around around how you want to proceed with your separation.

Kate Russell

Yeah. And you spoke a little bit before about the professionals that people might need to speak to throughout their separation. Just to go over those again, we’ve got lawyers, mediators, barristers. You mentioned if there was an instance where someone went into the family court, property valuations, other reports that are court mandated. I know a lot of these fees can add up in some cases, but then other cases are a lot simpler. So do you have like a minimum and a maximum loan size? And and if I have signed up to an amount of money, do I have to borrow all of it?

Jack O’Donnell

Yeah. Think the great question. So yeah. Exactly. To your point, you know, most people are able to to agree the property split without spending an absolute fortune. And that’s awesome. We want to be able to support people really hopefully to to agree as quickly, as efficiently and as cost-effectively as possible. So the the minimum that you can borrow from JustFund is $5,000 to contribute towards your legal bills and any other costs that you might need to to to agree your property split. There’s no maximum per se. It really just depends on on someone’s circumstances. But when someone applies for a line of credit, if they’re approved to your point, you’ve got complete flexibility over how you use that line of credit. Some people use all of it. A few have used none of it, but most people end up using, you know, a portion of it. And what’s great is you definitely don’t have to use it all, and often people don’t. And that’s great because that means people are agreeing and getting to a resolution in the quickest time possible and having spent less than what they initially thought. And that’s exactly the sort of outcome we want to support.

Kate Russell

And you said just then, there is no maximum. Depends on people’s circumstances. And you have to also talked about that. You know, you’ll only lend a certain portion because obviously people want a return on their investment. You’re not going to lend them everything that they’re likely to receive. Do you have an amount that you will lend people?

Jack O’Donnell

So the maximum that we can lend is about 25% of what we think someone is entitled to. Okay. And that that is a maximum. And what is great, and what you would certainly expect and hope is that certainly most people are not spending anywhere near that, that amount of money on legal bills and things. So. So no, it’s normally it’s normally substantially less than that. And to your point: as it should be. You know, obviously obviously if you need legal support and and other support services, it will cost you. But hopefully it’s only costing you a relatively small portion compared to what you’re going to be receiving from your property split.

Kate Russell

And by only lending up to 25% of what is anticipated they might receive, you’re not encouraging this kind of endless spending of the asset pool just for the sake of escalation and and fees and costs and things.

Jack O’Donnell

The line of credit, it’s always in accordance with a cost estimate that’s been provided by your solicitor. So you know, we certainly expect if solicitors are quoting an amount of money, we certainly expect that that’s what it’s going to cost. And to your point, certainly we want to be protecting our clients and our borrowers as much as possible.

Kate Russell

You just talked about solicitors and cost estimates from solicitors. If I want to investigate if I’m eligible for family law finance, for example, would I actually need to hire a lawyer before I could see if I’m eligible for finance? How does that work?

Jack O’Donnell

Anyone can apply at any stage and we’re happy to provide an indication as to someone’s eligibility at any stage. If you’re wanting to go through with it, and if you’re wanting to to receive assistance from us at that point, we would need you to have engaged a solicitor. But certainly, we welcome people getting in touch with us at any stage. Certainly earlier on, even before you’ve had a conversation, if you want to get a feel for if we can support you.

Kate Russell

Great. So someone could do that kind of pre-application stage to have the confidence that they could then have access to funds to seek that professional advice.

Jack O’Donnell

That’s right.

Kate Russell

So, Jack, what does your typical customer look like and what kind of customer do you see that JustFund can really make the biggest difference to in a family law matter?

Jack O’Donnell

We can assist anyone who meets our criteria. As I’ve mentioned before, anyone who’s going through a separation, whether you’re married or in a de facto relationship, and you’re at the stage where you’re looking to agree a property split with your with your former partner, we’re certainly finding at the moment that we’re helping those who might not have the same access to financial resources as their former partner, and to those who might be finding it tough to to to privately pay or to self-fund the costs that are associated with their separation.

Kate Russell

So you mentioned there that maybe one person doesn’t have access to funds and the other one does. What if both of you don’t? Because all your money is tied up in the property. You want to sell your property, but you need to reach that agreement stage and maybe get some orders drafted before you go ahead with that step. Can you actually help both parties from a relationship?

Jack O’Donnell

We can only help one party at the moment. And we assess applications on a on a first come, first served basis. But certainly certainly considering ways we can be helping, we can be helping both individuals in the future too.

Kate Russell

If I do want to apply. So you said we can check eligibility first before we have a lawyer. What is the process to apply and how long does that take?

Jack O’Donnell

So you can start the process online by completing a short form online. You’ll then be contacted by a member of our team, and that person will typically be a practising family lawyer who’s able to be your dedicated contact person from that point. And who’ll really be responsible for gathering the information that we need to be able to understand a bit more about your relationship, your circumstances, and your assets and liabilities so we can make an assessment in the quickest time possible, whether you’re eligible or not. And if you have engaged a lawyer at the time you contact us, we’ll get in touch with them as well just to learn a bit more about. Procedurally where things stand, and to get a better sense of the likely costs of going forward.

Kate Russell

And then I know applying for traditional loans can actually impact your credit score. Does applying for this or checking my eligibility affect my credit score?

Jack O’Donnell

Now applying for assistance from JustFund, whether it’s eligibility or a formal application won’t impact your credit score. And another key difference is you don’t need to be on the property title to be eligible for funding with us. So if you if you’re not on the property title and you’re a bit concerned about what that could mean for your application, that’s not a barrier to us considering or approving or supporting you.

Kate Russell

Okay. Right. So you like a traditional security would have to be in your own name. You’re looking at it from the family law lens and what entitlements are in the family law, not what your current situation is right now on titles.

Jack O’Donnell

That’s right. Whether you’re on title or not shouldn’t impact your entitlement under the Family Law Act. And so we very much take, as you said, the family law approach to assessing someone for family law finance.

Kate Russell

Yeah. Looking through a completely different lens to what that traditional lender might look at. So what for you Jack, is a good result for you. What do you see that JustFund is adding to someone’s journey, and that really will give them a good result from a loan.

Jack O’Donnell

So we realise that the that perceptions around costs of lawyers actually holds people back from getting. Often really essential and important advice, and also accessing a whole range of other really important support services as well. So we want to make accessing great advice and great support available to anyone going through a separation. And in doing so, we really want to empower you to achieve a really fair outcome and to ensure that you’re setting yourself up for your future after separation as best as possible.

Kate Russell

Yeah. To give someone access to justice, to find out what they’re eligible for in the first place. Right?

Jack O’Donnell

That’s right. We said it before, but think a lot of people out there often don’t understand their rights and don’t understand what they’re entitled to, and they might have heard different things or been told something from their former partner that’s just blatantly wrong. And so we really think it’s important for you to understand and to get advice for you, understand what your rights are and what you’re entitled to, so that you can make a really informed decision about the best path for you, for your separation, and really importantly, that you don’t sell yourself short and that you don’t, you know, accept something that in the short term might feel like a good outcome, but actually in the long term is going to harm you and it’s going to harm your your ability to to support yourself and support your family going forwards as well.

Kate Russell

That’s great. Jack, thank you so much for contributing to the podcast today.

Jack O’Donnell

Thanks, Kate. It’s been a pleasure.

Kate Russell

That was Jack O’Donnell, co-CEO and co-Founder of JustFund.

Would you like to know if you’re eligible for this type of funding? The link to JustFund’s quick, no-obligation eligibility check is in the episode show notes, along with their Borrower Guide and their information on our website. I really recommend you explore this option for the peace of mind and confidence to get the support you need for a fair outcome that will protect your long-term security.

If you’d like to learn more about your options in separation, or you want to be put in touch with professionals to help guide you through, please go to theseparationguide.com.au and complete our 3-minute interactive Q&A, or check out our other podcasts and blogs. If you’ve found the information today useful, please subscribe, share and leave us a review. It’s a great way to help our podcast reach others going through separation.

In the spirit of reconciliation, The Separation Guide acknowledges the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respect to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples today.