There are any number of difficulties that can lead to divorce. Sometimes, it can be something abrupt and painful like discovering an ongoing affair or a hidden addiction. In other cases, it can be the result of an ongoing struggle over an issue that has long been difficult for the couple. Financial struggles are one such issue.
Many married couples who have debt and struggle to budget and pay their bills often say that financial difficulties are the primary reason for their arguments. Even for couples who don’t struggle with debt, two spouses may have very different ideas regarding how money should be spent or saved. Couples may disagree over whether they should buy or lease a car, rent or buy a home, send their children to private or public school, use credit cards or not – the list goes on and on.
It would be understandable to assume that during times of national economic difficulty – as in a recession or depression – the financial struggles for couples would grow worse. In some ways, that is true. However, it doesn’t automatically follow that divorce rates increase. In fact, statistics have shown that during a recession the opposite is often true. Why is this the case?
Looking at the Economic Effects of Recession
During a recession, the economy is trending downward in a number of ways. Home values often drop, as do retirement accounts, stocks, and other assets. In addition, a recession often means changes for the entire family. Children may be transferred from private schools to public schools. Extracurricular activities may be limited. Plans to pay for college or expensive vacations or other non-necessities may be reconsidered.
It’s no secret that divorce is expensive. Couples who are divorcing incurred the expenses of moving from one home to two. This means two house payments, and two sets of bills for things like insurance, utilities, homeowners association fees, and the like. This is not to mention the cost of the divorce itself – legal fees, court fees, and other expenses. All of this can add up quickly.
As a result, during a recession, many couples find themselves in a less-than-ideal spot financially which leads to greater trepidation about incurring the expenses associated with a divorce. This is the reason why divorce rates ultimately don’t increase as much as people might expect during times of economic difficulty.
What if Divorce is Your Best Option?
Although it is generally true that some couples decide to wait until economic conditions are better to move forward with a divorce, this isn’t always possible. In some situations, for any number of reasons, a couple may find they have no option but to move forward with a divorce even during a recession. When this is the case, there are ways to ensure that you do so in a way that minimizes financial stress as much as possible – but how exactly do you do that?
The ideal scenario, of course, would be for a divorcing couple to have their finances in a healthy place before proceeding with a divorce. Having the resources to move out and move on is incredibly helpful and it can make the entire process much easier.
A couple can also lessen the financial burden of divorce by making smart choices. This may include pursuing mediation, collaborative law, or other out-of-court options that are not expensive and time-consuming like traditional litigation. It may mean deciding to postpone the sale of the marital home until the market is better. It may mean foregoing extracurricular activities or vacations temporarily until you can get back on your feet.
While none of these solutions are perfect, they can help lessen the financial strain and allow a couple to begin moving forward toward a better and brighter chapter ahead. It should also be noted that although the costs of divorce can be financially stressful at any time, there are actually a few unexpected financial silver linings of divorcing during a recession that couples might not consider at first.
A Look at Some Unexpected Financial Benefits of Divorce During a Recession
It may seem counterintuitive initially, but in some cases those who are primary earners actually find a recession to be in their favor as it may provide the opportunity to secure a reasonable rate of child support and alimony. Typically, both child support and alimony are based on the income of the higher earner. During a recession when the economy is in a weaker state, earnings are lower, but this may also mean that the provider paying the support may be able to secure a lower rate.
If, for example, you get divorced during an economic boom and have a decrease in income afterward, you may not necessarily be allowed to decrease your alimony. On the other hand, if you begin your alimony at a lower level and then begin to earn more, you can always choose to pay more. Certainly, the order should be fair, and may ultimately be modified later but for those making payments it is generally considered better to start an order at a lower level rather than a higher one from an economic perspective.
A recession can also present certain opportunities during divorce in the area of property division. Typically, during a recession, the value of businesses, real estate, retirement accounts, and other assets decreases. This may provide greater flexibility as the parties negotiate the division of those assets. For example, if a couple wants to keep the marital home as part of the divorce, a lower home value will mean that the spouse who is paying the other spouse a buyout will pay a lower amount than they would in a booming buyer’s market.
Ultimately, divorce in any set of circumstances is complex. It is a multi-faceted process, and it will be different for every couple. That’s why you need a guide who can walk you through the process each step of the way. At The Law Office of Dustin McCrary, we’re here to help.
The Law Office of Dustin McCrary – Here for You
Trying to sort through financial issues, and all of the other matters that a couple must address as they attempt to move through the divorce process can feel overwhelming. That’s understandable. The good news is, that you don’t have to go through this process alone. At The Law Office of Dustin McCrary, we’re here for you. We understand every aspect of the divorce process, and we’re passionate about helping our clients through a difficult time with the compassionate, effective, excellent representation that they need and deserve. We’ll meet you where you are, and we’ll help you move forward to a better and brighter chapter ahead. Give us a call today. We look forward to speaking with you soon.