Divorcing in a Tough Economy
The Great Recession of 2008 may be giving unhappily married couples pause before they untie the knot of matrimony. In that year, divorce fell from a rate of 17 divorces per 1,000 married women in 2007 to 16.9 per 1,000 married woman, "evidence that the challenges of job losses, foreclosures and depleted retirement accounts may be driving some couples to stick together," according to W. Bradford Wilcox, director of the National Marriage Project of the University of Virginia.
Demographers note that both marriage and divorce rates "tend to fall when the economy heads south and then rise when good times return," and some contend that the decline reflects a dramatic increase in the number of people cohabiting rather than marrying.
One thing remains certain, however: divorce is always hard, and divorce in economic hard times makes it harder still. Ironically, the same pressures that often assault a marriage - money and debt - make dissolving a failed marriage more difficult and, in some cases, a nearly crushing financial burden.
Even in good times, arguing about money remains a good predictor of marital problems. In hard times, financial woes and worries devour couples when spouses blame each other for money problems often of their own making, and now difficulties made worse by circumstances beyond their control.
In boom times or now in a recession, divorce is not a magic carpet carrying people away from their debt, but in the Great Recession, which has devastated housing prices, some unhappy couples appear to be thinking twice and taking longer before heading for divorce. A divorce in today’s economy happens on a terrain cratered by plummeting home prices, 25-year high unemployment rates, and staggering consumer debt.
An affordable divorce in the recession not only depends upon both spouses cooperating, but also on both realizing that the recession has called their hand, so to speak, and often cramped their options. One way or another, the two biggest assets divorcing couples divide - the family home and pensions - may well either lost value or been depleted as a result of the economic downturn.
Resources & Tools
COMMUNITY PROPERTY VERSUS EQUITABLE DISTRIBUTION -- There are two basic ways to handle divorce property division: Community Property: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and Puerto Rico are community property states. This means that all marital property is typically defined as community property or separate property. When divorcing, community property is typically divided evenly, and each spouse keeps his or her separate property. Equitable Distribution: All other states follow equitable distribution. This means that a judge decides what is equitable, or fair, rather than simply splitting the property in two. In practice, this may mean that two-thirds of the property goes to the higher earning spouse, with the other spouse getting one-third.
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