Downturn in Economy Making it Harder to Divorce

KATHARINE A. R. BROOKEMAN
Personal Services Group

  When Mrs. Sawyer decided she wanted to leave her husband of nineteen years, she thought she would have enough money to make it on her own. Now that the housing market has crashed and her retirement account has plummeted, she is left wondering whether or not she can make it on her own. "It's a really bad time to divorce and separate our assets right now. I'm not even sure what assets there are left to divide." said Mrs. Sawyer. She has not worked for ten years and would require computer training to enter the workforce again. In the past, spouses could achieve some financial independence with an equitable distribution award. With nearly one in six homes worth less than the mortgage owed on it, according to Moody's Economy.com, and retirement portfolios dropping over forty percent, the question has now become not who will take what percentage of the proceeds but who will take what percentage of the debt.

  Before the downturn, couples typically built equity in their homes, and then divided that equity in a divorce, either buying out the other's share or selling the house and splitting the proceeds. But after the recent financial crisis, more couples own houses that neither spouse can afford or wants to maintain, nor can they sell it for what they owe. This is adding to what is already a stressful time for couples who have started down the divorce path. When one recent client's husband moved out of their marital residence, the only way she could meet the monthly mortgage payment was to rent two of the rooms in the house out to tenants. This is often not an option for spouses who may have minor children still living with them and do not have the additional space.

  For other couples, separating under the same roof is the only option. In one case, the husband is living in the master bedroom and the wife is living in the guest room until one of them can afford to move out. Although this is not the ideal situation and provokes images akin to "War of The Roses", it enables the couple to save money. If children are involved the physical proximity to both parents can be an added benefit. While the parties save money for the other spouse to put money down on a house, they make do with sharing living spaces.

  As divorce has become more complicated and often more expensive, with lower chances of getting a big payout from the other spouse, some divorce lawyers say that business has slowed or that clients are deciding to prolong their marriage because there are no assets left to use to make a fresh start.

  For those spouses who must bear the market in the face of divorce, don't give up hope, there are ways to protect your financial future.

Here are my tips:

1. Once you have decided that you want a divorce, the earlier you get an attorney, the better.

2. Live more frugally and eliminate unnecessary expenses.

3. If you are financially dependent on your spouse, file for temporary support immediately upon separating. Your lawyer will help you with this.

4. Keep good records of where you are spending money in case you need to offer support for your standard of living.

5. If you aren't already seeing a mental health therapist, start now to help you deal with the emotional fallout during this difficult time.

--------------------------------------------------
Citation
"Breaking Up is Harder to Do After Housing Fall". December 30, 2008