Divorce during the Recession


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!

About wendy

Wendy W. Spencer, CFP, CDFA is a Certified Financial Planner, a Certified Divorce Financial Analyst, and a family law mediator who helps divorcing individuals, couples, and families to review and obtain more sensible settlement options. Ms. Spencer also helps these families to resolve their differences through mediation and/or participation in the collaborative divorce process. For the convenience of clients throughout the Denver metro area, Ms. Spencer has two offices - one in Arvada and one in Southeast Denver.
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