July 17, 2009 by wendy.

The last blog I wrote discussed the fact that many people may be too poor to get divorced.  A new twist was described recently in the Wall Street Journal article, dated Monday, July 13, 2009, and titled “What God Has Joined Together, Recession Makes Hard to Put Asunder.”   The author, Jennifer Levitz, interviewed several couples that have gotten divorced, but still live in the same house.  The reason for this situation is twofold:  one of the couple is unemployed and/or they are unable to sell the family house.  According the couples interviewed, they seem to manage their lives OK, even if it is awkward at times.  Certainly it is not a desirable situation, but they have chosen to reside in the same house at least until their financial situation improves.  I saw this situation occur with clients in my practice.  They are still living in the same house, and trying hard to make a difficult situation work, with varying degrees of success.

Ms. Levitz also discusses the fact that couples are delaying the decision to divorce, even though their relationships are not working for several reasons – some are uncomfortable at being single during this recession, or they are waiting until economic times improve.  I found that a similar prevailing sentiment developed after the September 11, 2001 attack and persisted throughout 2002.  After that, the economic situation improved, and people began filing for divorce once they were more financially comfortable.  Eventually couples found a way to dissolve their marriages if they wanted to do so.

Some ideas for people stuck in this situation:

1.      Work on your relationship.  Spend some of the time actively trying to improve your relationship with your current or ex-spouse.   Get professional marriage counseling help if you feel you need it.

2.      Jointly develop some rules or guidelines – about sharing household tasks, respecting privacy, dating, and parenting, for example.  A professional mediator may be able to help you work through these issues and to jointly develop a plan for living together until you can physically live apart. 

3.      Schedule some separate time.  Try not to spend a lot of time together if the togetherness makes your relationship worse.  Find activities to perform in the house that you will do separately, or schedule outside activities with friends and family if possible.

4.      Work on your finances.  Prepare a budget and stick to it.  Cut expenses where you can – be creative!  Review your assets and your liabilities and reduce your debt where possible.  Do a “what-if” budget assessing your expenses for if and when you divorce.  You will need to know this information anyway to make good decisions about dividing marital assets when you do decide to divorce. Contact a financial professional experienced in divorce matters if you need help.

Do you have any other thoughts on how to handle this situation?  If so, please let me know!

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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.

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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!

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