Articles Posted in Financial Issues in Divorce

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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.

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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.
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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.

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