August 16, 2010 by wendy.

I have received calls and emails from mediation clients from a year or two ago about one of the party not fulfilling the terms of Settlement Agreement that they both signed.  In some cases, some former clients may have some substance or emotional issues impede their ability to deal effectively with their family situations and moving ahead on finishing financial issues. However, in other instances, the financial issues have surfaced as a major problem, instead of family or children issues erupting.  During these unusual economic times, it should come as no surprise that finances have risen to be the source of major post-divorce conflicts.

The poor economy has made clauses in some Settlement Agreements difficult to fulfill.  Who knew in 2008 that a couple with a very lovely and well-maintained home in a wonderfully upscale area would still be unable to sell it by 2010?  I am sure most people didn’t anticipate not being able to refinance their house after the divorce.  Unfortunately, concurrent with the financial industry meltdown, real estate values plummeted in most areas of the country.  Add in the dramatic change in mortgage refinancing regulations and within a few months, and a person’s financial picture and plans have drastically changed.

So – what to do if your spouse is supposed to sell the house, or refinance the mortgage in his or her own name?  Should you demand that they do so to meet their obligations in the Settlement Agreement?  Perhaps you should, if the individual is really procrastinating.  However, if the other party is unable to meet their obligations to sell the house or refinance the mortgage, he or she may have legitimate reasons for this delay.  The current mortgage may be more than the value of the house, the ex-spouse may have poor credit or insufficient income to meet the new mortgage requirements, and other reasons may be very real and legitimate.  I remind my clients that they do not need to do something rash that rebounds on them.  This is especially true if there is no real and compelling need to fulfill the Settlement Agreement except to have things final.  For example, if one ex-spouse insists that the other spouse sell the house and the value is considerably less that the mortgage, the spouse with the house may just decide to default on the mortgage.  This can seriously damage the credit of both parties.  Extending additional time to refinance or sell the house, or to fulfill other specific parts of the Settlement Agreement might just be to the benefit of both parties.

My suggestion to several clients has been to re-negotiate the Settlement Agreement.  If you can do so, you may want to refrain from involving legal counsel to force the situation unless absolutely necessary – it is expensive and often only inflames the situation.  Put any change to the Settlement Agreement in writing, after which you may want to have legal counsel review it.  Set specific dates by which the issue in question should be resolved.  Ask for proof that the ex-spouse is moving towards fulfilling their obligations, or proof that they cannot do so at this time.  For example, if your ex-wife is required to refinance the house and says that she needs more time, ask to see her mortgage application and any correspondence that is associated with this loan.  If the mortgage value is higher than the home value, ask to see a recent appraisal and a statement from the mortgage company showing the loan value.  You also may want to consider various “what-if?” situations, such as, what if the house really cannot be sold?  Will you then consider a short sell if possible, a default, or another extension?  Be sure to think about all possibilities – the economic situation these days can make any number of alternatives probable.

Often the issues that were some of the underlying cause of the breakup of the marriage still exist.  This means that some former couples are still unable to resolve their post-divorce disputes successfully.  In these cases, the people may wish to contact their former mediator to help them resolve the issues.  Their mediator is familiar with their case and with each of the clients and may be able to help them come to a satisfactory resolution.  This alternative may be better and less expensive than the litigation route, and is certainly worth serious consideration.

Post-divorce difficulties are common – and even more so these days.  It certainly makes sense for former spouses to try to work out things between them, write out their agreement clearly, and show progress being made towards fulfilling the terms of their agreement.  Divorced people have a chance to start fresh and, if possible resolve the difficult issues fairly and productively.  I am convinced it can be an excellent learning and growing experience for them.  It is at least the sensible and practical thing to do.

Posted in Blogroll, Money and Divorce, Divorce Mediation | Print | No Comments »

October 12, 2009 by wendy.

The recession has changed the face of divorce.  Divorcing couples have a lot less money to spend, and the dividing the assets and debt has become even more important than ever.  Couples are often angry and emotional when going through divorce, and all too frequently, one or both parties’ initial reaction is to “get an attorney and go to court.”  In some cases, hiring an attorney is necessary and the smart thing to do.  There are some pitfalls, however.  Attorneys often help clients settle out of court, but the cost is high – both emotionally and financially.  And using attorneys to settle a case is often a matter of positional bargaining – one wherein more “stuff” for one person means less for the other party.  Litigation is even more expensive and emotionally draining. 

One way to potentially save money on divorce is through mediation – if both parties truly want to try to settle.  Mediation is usually “interest-based,” in that the mediator helps the parties to satisfy their interests and concerns in the divorce, rather than just dividing the pie.  So – not only can mediation be a more-cost effective solution, the outcome can be creative and include any number of issues that are important to the divorcing couple, but not necessarily to an attorney.  Moreover, the parties are more likely to adhere to the settlement if they have a role in creating their settlement.

These days, any settlement agreement (called a Memorandum of Understanding by many mediators) should be very thorough.  The rocky economic times in which we live dictates that a good agreement should contain any number of “what-if?” clauses.  What if the house doesn’t sell?  What if one of us loses our job?  What if one of us gets sick and can’t make the payments as agreed?  What if the spouse getting the house cannot refinance?  These and other questions that are germane to each couple’s situation should be included in a settlement agreement these days. 

In mediation circles, there is an expression, “If you litigate, you lose.”  Although a dramatic expression, there is some truth to this.  With mediation, couples maintain control of the process, expenses, and potentially, the outcome.  With litigation, couples put much of their control in the hands of attorneys, the expenses can increase dramatically, and the outcome is often a crapshoot in the courts.  Even if the couple does not go to court, and the attorneys are very involved in settling the divorce – and all too often their focus is strictly on dividing the marital assets.  They may or may help to resolve other, often personal, interests that are important to one or both of the parties.  Additionally, attorneys may or may not be aware of the taxes and the long-term impacts of the settlement on one or both parties. 

Be aware that just because you may be going to mediation for your divorce, you can still consult an attorney.  An attorney will be able to provide good, legal advice, especially for more complex cases.  At a minimum, an attorney can review your Memorandum of Understanding to make sure your legal interests are covered.  Moreover, if the mediation is not successful (and not all are have positive results), you always have the option of stopping the process and going to attorneys.

Mediation is a potential solution if both parties truly want to settle their divorce without attorneys and litigation.  It can achieve a win-win outcome, address the couples’ interests and concerns, and result in a more positive adherence to the settlement, all at a possible lowered costs.  It is not necessarily the right approach for each couple and each situation – but it is important that both parties know and understand their option.

Posted in General Divorce Issues, Money and Divorce, Divorce Mediation | Print | No Comments »

July 10, 2009 by wendy.

It really is true what they say – these days some people are staying married because they don’t have the money to get divorced.  An article in the Wednesday, June 8, 2009 Denver Post substantiates this issue.  Of “certified divorce financial analysts” surveyed by the Institute for Divorce Financial Analysts, 68 percent spoke of clients who could not afford to get divorced because of the recession.  Couples, however, should never give up on the hope of giving up all hope.  Said Fadi Baradihi, the group’s CEO:  “It’s imperative for divorcing couples to keep in mind that the current economic conditions will indeed change.”

How much does it cost to get divorced, recession or not?  That depends on each couple’s situation.  First, there are various fees for filing the paperwork at the county in which the couple lives.  This could be $500 or more.  Couples with children under 18 are required to each take a parenting class, so add perhaps $100 to the tab.  These fees are for couples filing pro se, or without legal representation.  Moreover, these fees do not change, whether economic times are good or poor. 

If couples get stuck and need mediation or divorce financial advice, they can expect to pay for a few hours of consulting time, or for the entire mediation plus having their settlement agreement drafted for them.  Let’s say $300 to $2000, although it could be more or less, depending on the issues.  If Qualified Domestic Relations Orders (separating pension plans or 40lK plans) are required, add on $500 for each.  What about a business, real estate or pension valuation?  The fees vary widely for qualified professional valuations - anywhere from $200 (property valuation)  to $10,000 (business valuation) or more, depending on the asset being valued.  Some people may decide to ask an attorney to review their settlement agreements, and this could run $500 to $1000. 

If all does not go well, and the couple has decided to engage quality legal professionals, these fees will often begin at $5000 to $10,000 each and can go upwards from there, especially if the divorce is acrimonious and they settle in court.  Expert witnesses may be engaged, depositions taken, exhibits prepared, all of which are expensive.  Certainly, it is less expensive to mediate than to litigate. 

The costs of actually physically separating and the couple’s economic circumstances often are the deciding factors when considering divorce.  One caller told me her spouse was unemployed and they could not afford to pay their bills and live separately at this time.  Other people have not been able to sell their house.  They could not afford to make the house payments and pay rent on a separate place for the other spouse.

The costs of filing for divorce and paying for legal, financial, and mediation experts will not change.  However, Mr. Baradihi is correct.  At some point, the recession will end.  People’s financial situations will turn around, especially if they have made efforts to manage their finances in a careful manner.  Until then, people might consider seeing a therapist, getting additional exercise, or somehow managing their stress in a positive way.  Hang in there.  Most people’s economic situations will change as the recession recedes.

Posted in Money and Divorce, Divorce Mediation | Print | No Comments »

July 8, 2009 by wendy.

Divorce is often devastating enough without having money problems.  Unfortunately, money is often one of the underlying reasons for divorce.  These days, with money in scarce supply, matters have become worse.  Couples who wish to divorce are finding it even more difficult to end their marriages.  Consider the following scenarios:

1)      One or both spouses may have been laid off, or unable to fid jobs even if they wish to return to the workforce. 

2)      A couple may not be able to sell their home in the current real estate market because their mortgage may be higher than their current home value. 

3)      A couple may find that their debts are so large that one or both of them may not be able to actually afford the payments while married, much less when divorced.

4)      One or both parties may not be able to financially survive the expenses of setting up and maintaining two separate households. 

How are people handling this situation?  Although divorce filings are up in many of the Colorado front range counties, a number of couples are filing pro-se, or without legal representation.  This may be workable for simple cases, and can save couples a considerable amount of money.  However, some people may make serious legal or financial errors that can affect them far into the future.  At the very least, couples divorcing pro-se should consult a financial expert specializing in divorce to review their situation, and an attorney to review their final documents.

Other couples are staying together and toughing things out until their financial situation improves, such as one party becoming re-employed.  This may be a practical, although possibly difficult, approach.  Deferring divorce temporarily may make sense if it appears that the bad financial situation is only temporary, and there is no violence or abuse occurring.

 Some couples are opting to physically separate, and live with friends, family, or somehow apart from each other until they are financially able to file for divorce.  This makes a lot of sense, especially if the tension and disagreements are making the household situation unlivable.  While it may postpone the inevitable, at least the couple may be able to live in a more peaceful environment until their financial situation improves.

Other couples are considering bankruptcy, and then divorce.  If they have income, but a lot of debt, this may be an alternative to consider. However, people in this situation should always consult an experienced bankruptcy attorney before making any decisions.  Although bankruptcy attorneys charge several thousand dollars for their services, couples may be able to get themselves out of the burden of extensive debt, and then can go on with their lives. 

The final way that people can get divorced and potentially save money is to consider mediation.  If a couple agrees that a relationship (because of children, family, and/or friends) is important, or they do not have significant disagreements over most of the items in a divorce, mediation may be the right approach for them.

These are the ways that I have heard about couples dealing with divorcing during the recession.  Does anyone have any other approaches that they know of?  If so, please let me know!

Posted in General Divorce Issues, Money and Divorce, Divorce Mediation | Print | No Comments »

December 22, 2008 by wendy.

Divorce can be a frightening process.  In addition to all of the emotions involved in divorce, there are seemingly endless numbers of papers to file, numerous decisions to make, and uncertainties about the future.  Divorce can also be expensive, with filing fees, attorney consultations, possibly selling the house, and having to budget with more expenses but no additional income.  These expenses often add to a divorcing person’s sense of being overwhelmed.

During 2008, I saw a large number of divorces in my mediation practice.  Many couples chose to mediate for a number of reasons – as an alternative to expensive litigation; to be able to shape their own settlement agreements; or perhaps to keep the relationship with their spouse relatively amicable.  Regardless of the reasons, I find myself admiring many of the couples who come to me for mediation.  I think it takes a lot of courage to expose your financial (and marital) situation to a stranger (albeit a professional), and to discuss the dissolution of a once-hopeful and warm relationship.  With the advent of a divorce, people’s dreams are vanishing, and their lives will be changed forever.  It seems easier to have someone else do the fighting for you.  However, rather than having a safe barrier of an attorney who exchanges letters and requests for documents with the other attorney, people are choosing to face their spouses and really work together through their issues to create a settlement that is right for them and their children.  I think this courage, in spite of all of the emotions and trauma, is admirable.  I also think highly of couples who seek out experts to help them wade through the morass of inter-related divorce pieces they must assemble, such as child support, maintenance, taxes, the marital home, and the overall settlement picture.  They can then make informed decisions about their future and avoid some of the nasty pitfalls that can otherwise occur.

It takes courage to face a spouse and make decisions about your futures when it was difficult to do so during your marriage.  However, the process of mediation, while often difficult, uncomfortable, or painful, can make for a healthier and better future for your overall family – and that is truly laudible. 

Posted in Blogroll, General Divorce Issues, Divorce Mediation | Print | No Comments »

May 24, 2007 by wendy.

   All too often divorce professionals view divorce as just a series of legal proceedings.  Divorce papers are served and filed with the court, attorneys request additional paperwork from the other party, the couple has court-mandated dates to meet and parenting classes to attend, attorneys negotiate with the opposing side, and ultimately, sooner or later, the divorce is final.  At that stage, the perception of many of the professionals involved in the divorce is that everything is over and erased.  They believe that people just go on with their lives, as though a book has been finished and put away.  Unfortunately, the reality is not quite that simple.

 
  For the affected couples and their families, the impact will be felt for a very long time.  Some people will deal with the after shocks of divorce for the rest of their lives.  Many will be damaged by a formerly dysfunctional relationship and some by the ugly and protracted court battles and settlements.  People subjected to major life upheavals need time to recover. Certainly, they must attend to the mundane everyday chores, but they should not neglect their own emotional well-being.  Families too, including children, may often need to deal with their emotional states, such as grief, anger, and depression to begin healing and living healthier lives.

 
   It is important for divorcing couples to recognize that divorce is not just a well-defined set of legalities, but is a series of interrelated processes unique to each individual.  These processes may include legal, emotional, financial, interpersonal, and practical areas.  Depending on the situation and the individuals involved, some areas will need more or less attention.  One spouse may move on quicker than the other, some children will fare better than others, but divorce is a drastic change for all people involved.

 
   How can people help themselves through this deeply involved divorce process?  Several ways come to mind: 

1. Choose a non-adversarial divorce, if possible.  The method of divorce (litigation, mediation, collaborative, or pro-se) may influence relationships with the soon-to-be former spouse and/or children.  If at all feasible, the least adversarial process should be chosen, to help maintain workable relationships with the other party.  Even if a party chooses to divorce by a pro-se (aka: do-it-yourself) method, a reputable family law attorney can help an individual navigate through the often-confusing legal process and help an to ensure the person understands their rights.

2. Get help from the experts.  It doesn’t have to cost thousands of dollars, but conferring with a therapist to work through the confusion and anger will go a long way in helping future healing.  Other experts could be a good divorce financial analyst, a reputable real estate broker or mortgage broker, a CPA skilled in business valuations or stock options estimating, and others professionals, depending on the particular situation.

3. Surround yourself with loyal friends and family members who are upbeat and encouraging.  This is a not the time to be around negative colleagues or neighbors – they can just bring you down, and can often be draining.                                                           
4.  Do something nice for yourself that doesn’t have to cost a lot of money – something that may make you look better (a manicure), feel better (a massage, a work out, or a new music CD), or an upbeat and interesting book.  Take a long weekend for a mini-vacation, or purchase a gym membership.

   Understand that finishing a relationship and adjusting to a new life takes time – and work.  Therapists tell me that although individuals’ reactions are unique, many people make take one or two years, sometimes more, to feel comfortable in their new lives.  Remember, this type of dramatic change is truly a process, which eventually people will finish and be able to go on to a healthy and productive future.

Posted in General Divorce Issues, Divorce Mediation | Print | No Comments »

November 9, 2006 by wendy.

   If you and your spouse are relatively amicable, but you have certain sticking points about your divorce, mediation may be for you.  Why?  You have a neutral third party helping you to reach resolution in a constructive way that is non-threatening, creative, and permits a friendlier future relationship.  You also have the opportunity to develop your own solutions, and not have them imposed upon you by a judge.  Moreover, people who help develop their own solutions are more likely to adhere to their agreements than those who have a solution mandated by an outsider. 

   If those are not sufficient reasons to try mediation if the situation is right for you, consider the costs of two attorneys, expert witnesses, and a protracted and hostile court case.  For some, the litigaged case is necessary.  However, many couples have difficulty living on two incomes, and living separately on one income will be very challenging indeed.  Cutting divorce costs may make sense to them as well. 

   So - it may be possible to save money, end your relationship constructively, and have a healthier future relationship with your spouse with mediation - if both want to mediate rather than litigate. 

Posted in Divorce Mediation | Print | No Comments »