Illinois Divorce Lawyer Blog

The following is a hypothetical example, but a very real description of a family dealing with legal issues in a recession:

When Patrick and his wife divorced, they agreed to sell their home. Yet, once a buyer gets close to making an offer, his wife backs off, believing she can buy him out of the house with housing prices (and the equity buy out price) dropping each month.

To complicate matters, Patrick, not his real name, recently lost his job. He is going to go back to court and ask that his child support be reduced. According to legal experts from around the country, Patrick’s tale isn’t unusual. The recession that’s affected every other aspect of America is now affecting family court as well. Clients are returning to court as a way to deal with financial hardships that are affecting their support obligations and property settlement agreements.

Despite the recession, many families need to re-engineer their family structure through a divorce process. Many couples need to separate and divorce. Psychologists that are studying the impact of the recession on couples in marital distress believe that despite financial concerns, couples whose marriages have failed should separate and divorce. Living under the same roof, to save money, is usually not a healthy option for the couple, and the children.

My law office has introduced some new payment plans to allow families in transition to afford the process of divorce. Payment plans, credit facilities, and even flat rate plans can be implemented to allow families needing family law services to afford them. My office has always worked on a cutting edge, creative, cost effective basis. I take pleasure in saving my clients money on legal costs, even in complex, difficult cases.

In a recession, we all have to work together to get through this difficult time of recession, and emerge down the road stronger, financially and emotionally.

Just as fuel efficient cars become more popular during a period of high fuel prices, cost effective legal representation in divorce cases becomes a welcome path for people looking to end their marriages. The Law Offices of Michael F. Roe has consistently advocated cooperative, mediated, and collaborative divorce as a lower cost, efficient, and low stress means of helping divorcing parties complete their divorce in a financially healthy way, even in a deep recession.

The deepening recession, increased unemployment, and a stalled housing market have negatively impacted most parties' financial situations. Many divorcing couples' homes are "under water" because of declining values and high mortgages. Other divorcing couples who are fortunate enough to have equity in their most significant marital asset, their home, cannot sell their house due to the slow real estate market. Combine that with the plummeting values of retirement accounts, and we are looking at marital asset balance sheets that are nothing less than bleak.

Although, historically, divorce rates tend to rise during a bad economy, divorce attorneys nationwide have noticed a change in the legal landscape. Some experts attribute the decline in divorce filings to the severity of the economic downturn. Typically, a recession results in decreased divorce rates for couples with limited financial resources. The prospect of incurring expenses for two households seems overwhelming for those with limited resources. On the other hand, high net-worth clients may seek to take advantage of the diminished value of their homes, stock and investment portfolios, and businesses to decrease their overall financial liability to their soon-to-be ex-spouse.

Continue reading "Cost Effective Divorce in a Recession " »

1. Hanging onto the house at all costs.

Many couples scrambling to obtain a divorce settlement wish to keep the house at any cost. However, keeping the four bedroom marital home may be a financial undertaking that neithe rparty can absorb in the post-divorce environment. Maintenance and child support to the recipient parent can help fund the mortgage and taxes, but some parties find that the burdens of keeping the marital home post-divorce outweigh the benefits, especially in this current home market/mortgage environment.

2. Failing to make a clean financial break.

Clean separation of assets and debts is another difficult task, but one that Howard Dvorkin, the founder of Consolidated Credit Counseling Services says is absolutely necessary, or the consequences can be devastating. Although the task may seem insurmountable, “the alternative is much worse,” says Dvorkin. “Having a spouse drive up your debt when you’re not married anymore” can seriously affect one’s credit score.

3. Counting on your ex to honor financial commitments.

Depending on your former spouse to comply with financial arrangements is also a huge mistake, according to this article. Although both parties in a divorce are beholden to a court-ordered divorce agreement, creditors are not bound by the terms of the divorce judgment. If your ex fails to pay on debts or loans, you may be hurt when applying for future financing.

4. Forgetting to change your will and beneficiary forms.

Wills and trusts can also be seriously impacted by divorce proceedings. Parties in divorce should separately seek counsel for the redrafting and execution of new estate plans, reflecting the wishes of the maker of the will and/or trust prior to the time of the divorce.

5. Overlooking taxes.

Finally, never forget which amount of money in your divorce settlement is maintenance, and which amount is child support. While child support payments are not taxable to the recipient, maintenance payments are.

Source: "Breaking Up Is Hard To Do Financially" by Kathy Chu, published in USA Today. Thanks to South Carolina Law Blog for the highlighting of this article.