Divorce can leave individuals facing significant financial and emotional turmoil, but for some women, the process has been exacerbated by high-interest litigation loans that have led to crippling debt, homelessness, and even suicidal thoughts. Advocates and those who have experienced this situation are calling for urgent regulation of these financial products.
Shelley Kavanagh, who divorced in 2015, assumed her assets would be divided fairly after her marriage, which had produced significant wealth. However, she was advised by her solicitor to take out a litigation loan to cover legal costs. This loan, secured against the marital home with an 18 percent annual interest rate, ballooned to £360,000 by the time the property was sold in 2021. Her husband's similar loan resulted in combined loan debt from the house sale exceeding £800,000, wiping out almost all of her equity. The financial strain led to her credit rating being destroyed, preventing her from renting a home and separating her from her three children.
Rosie Heys, another divorcée, faced a similar predicament. Advised by her solicitor to take out a £100,000 loan for legal costs, the debt grew to a staggering £950,000 by the time her marital home was sold a decade later, accruing interest at a rate of £600 per day. This situation caused immense stress, leading her to attempt suicide and require psychiatric care.
These litigation loans have become a growing concern, particularly since cuts to legal aid have removed funding for most private family law and divorce cases. Research by the Women's Budget Group indicates that women are disproportionately affected by these reduced legal aid provisions. The Civil Justice Council recommended regulation for litigation funding agreements (LFAs) in June 2025, and the government has announced its intention to change the law surrounding them, though specific details are pending.
Critics argue that individuals undergoing divorce are already in a vulnerable state and should not be subjected to opaque loans with escalating charges. Former MP Seema Kennedy, executive director of the campaign group Fair Civil Justice, emphasizes the need for clear cost disclosures, proper affordability checks, and effective regulatory oversight to prevent access to justice from becoming a path to financial ruin. Kavanagh noted that her loan was paid directly to the law firm, giving them what she described as a "blank cheque" to charge as they wished.
Novitas, a prominent lender in this space launched in 2011, was acquired by Close Brothers Group plc in 2017 and ceased lending to new customers in 2021. While Novitas no longer operates, Close Brothers continues to support its former customers. Heys filed complaints with the Financial Ombudsman Service regarding Novitas's lending practices, receiving some compensation for the lender's failure to provide regular statements and conduct adequate affordability checks. However, the loans themselves, having been used to cover legal fees, remained largely untouched.
Kavanagh and Heys have co-founded the campaign group Divorce Without Debt to raise awareness and advocate for reform, having met through an online forum when Heys posted about her own financial distress. Their combined debt reached £1.3 million. They share their stories to warn others about the potential pitfalls of litigation loans, highlighting the devastating financial and emotional consequences they have endured.