Divorce is difficult enough. But when you are facing a recession like the Great Recession””with all the financial uncertainty around it””the challenges of divorce seem to multiply.
In our practice, we have seen the economic impacts first-hand. Some couples are reluctant””or simply unable””to sell jointly owned homes. Others are having a harder time making maintenance and child support payments. Statistics show that these couples, and perhaps you, are not alone. Across the country, couples going through a divorce or modifying existing agreements are experiencing greater levels of stress and upheaval due to economic conditions.
Over the past couple of years, the national divorce rate has decreased significantly, suggesting that some couples who may otherwise have divorced are now limited by financial strain or are afraid to make any major life changes at this time.
Across the country, the impact of harsher economic times has been mixed. Divorce rates had initially declined, leading to divergent speculation that the recession was bringing couples closer together””or that financial hardship was preventing separation. In reality, both opinions appear to be true, according to a study conducted by the National Marriage Project at the University of Virginia. Tough times bring some folks together, while they drive others farther apart.
It has long been reported that financial stress wields significant force in marriages. The UVA study confirmed that, reporting that only 27% of respondents with two or three financial challenges””job loss, foreclosure, and so on””saw their marriage as a “happy” one.
Recent economic evidence suggests that nearly 16% of the working adult population is unemployed, significantly higher than the reported rate of 9.2%. Clearly, that has an impact on the level of stress in a marriage.
At the same time, many couples considering divorce have been forced by economic conditions to put a hold on separation and divorce plans. In the above study, 38% said they had put those plans on hold. The reason for that statistic is likely largely driven by the decline in home prices.
In America, during the boom real estate market of the 1990s and early 2000s, housing prices rose, sometimes dramatically in many areas. Now, in many markets, homeowners are underwater, literally trapped in homes that are worth far less than what they paid.
Housing “wealth” is often the largest tangible financial asset a divorcing couple has. In many markets””including Colorado””selling that asset has become increasingly difficult. It can take many months to sell a property, if it sells at all. And when it does sell, it is often for a reduced price. Many homeowners have to come to the closing table with money to simply clear the loan. Or they go the route of foreclosure or short sales.
But the reality is that the grim outlook for housing values has led many couples to postpone divorce, pushing divorce rates down for the time being.
If you, like so many others, find yourself feeling trapped by any number of recessionary impacts, speaking with an experienced divorce attorney can be beneficial. Though not always ideal, there are a few options for divorcing couples when it comes to dealing with their family home or negotiating maintenance and support during the recession. An attorney can walk you through some of those alternatives, giving you additional resources and strategies while helping you chart a course forward, even as we continue to navigate rough economic waters.
Next week, we will discuss some options for selling the family home during the divorce process.