Couples holding off on divorce during economic downturn
by Kara G. Morrison - Jun. 15, 2009 12:00 AM
The Arizona Republic
When Michelle Campbell filed for divorce last year after 13 years of marriage, she underestimated its toll on her finances.
“I went from Nordstrom to Walmart in like 24 hours,” the Scottsdale Realtor said. “I have friends who are not getting divorced because they see what it’s done to me.”
The economy appears to be doing what marriage counselors struggle to do: keep couples together. Spouses are hesitating to divorce because of the high cost of breaking up.
Local divorce attorneys said they’re hearing of more people who feel they can’t afford to leave spouses and move on with their lives. That flies in the face of conventional wisdom, which holds that divorce rates rise with economic stress.
In Arizona, total granted divorces and annulments dropped by 530, or 2.2 percent, last year vs. 2007. In January and February of this year, there were 2,551 granted divorces and annulments in Maricopa County, down 1 percent over the same period in 2008.
However, the county’s latest numbers have just started to show a sharp rise, with granted divorces and annulments rising by 178 - 16.6 percent - in March over that month last year.
“It’s difficult (to divorce), because the housing market is so terrible right now,” Phoenix divorce attorney Daniel Siegel said. “For the average person, the house is their biggest asset. When that is worth significantly less, and in a lot of cases underwater, it makes it a lot harder to figure out what is going to happen with that asset. It certainly makes it more difficult to try to come up with solutions for people.”
Phoenix life coach Vickie Champion knows of at least one marriage saved by the downturn. She said a client “was dead set on leaving” her husband, but after realizing she couldn’t support herself in the current economy, she worked on the marriage.
“Most people who are married don’t communicate,” Champion said. “The easy way out before would be to leave them, but now the easy way out is not to leave them.”
Angela Hallier, a Phoenix family-law attorney, said divorce trends have shifted in the past year. She’s seeing more people who feel they can’t proceed for financial reasons. She also has had couples who live together through their divorce because they can’t sell their homes.
“There are many cases where we are coming up with rules of engagement for the household,” Hallier said. “It’s like roommate rules.”
In these cases, she said, soon-to-be ex-spouses are dividing up square footage, along with belongings and household duties.
“We’ve gone as far as to say who gets what mattress,” Hallier said.
Nationally and locally, divorce rates have been heading downward since the 1980s. Statistics don’t adhere to conventional wisdom about recessions triggering divorces, either. Although national divorce rates (the number of divorces per 1,000 population) climbed during the 1970s recessions, they fell during downturns in the 1980s. Still, Siegel believes in normal economic dips, money problems place a huge stress on marriages.
“I think financial stress is something that, for some reason, is much, much more difficult to get through and to deal with,” he said, adding that this downturn doesn’t seem to follow the typical rules. “During the recession in 2000-2001, we didn’t see this type of impact on the real-estate market. This is certainly a lot different than a normal recession.”
Phoenix family-law attorney William Bishop also expected to see the divorce rate rise slightly when the economy started to contract last year.
Many of his divorce cases are more complex because of couples’ financial circumstances. Bishop said he has had to refer more clients to financial planners, and some have had to go through separate bankruptcy proceedings.
“It’s a lot easier to divide an asset than a debt,” Bishop said. “It really does take more creative thinking to get people separated when you have debt.”
On the flip side, one demographic may not be so hesitant to part ways. Affluent couples are finding it easier to split right now than middle- and lower-income couples.
“If you have a lot of cash on hand, the assets you’re dividing now are (worth) a lot less,” Siegel said. “I don’t want to say it’s a bargain situation, but you can buy the assets for a lot less.”
Hallier also said she has seen an increase in divorce cases among affluent couples where the sole working spouse recently lost significant income.
“It brings to the forefront the dysfunction of the marriage,” Hallier said. “While they had a high and substantial income, it was easier to live with (problems).”
Among her divorcing clients, Hallier said it’s staggering how many have a direct connection to the state’s hardest-hit industry.
“The percent of divorces where one spouse is involved in real estate is huge,” she said.
If there’s any silver lining in current trends, it’s that some couples are getting more creative and exploring more-amicable settlements. Mediation - a process in which spouses agree to work with a mediator and settle out of court - has been on the rise for the past three to five years, said Rich Gordon, principal mediator at A Fair Way Mediation Center in San Diego.
Hallier also said more divorcing couples also are undertaking a “collaborative divorce” where each spouse hires his or her own attorney and agrees to settle out of court. The collaboration helps couples - especially those with children - work through lingering issues, sometimes with help from a therapist, child psychologist or even a CPA when complex finances are difficult to separate.
“It’s sometimes less expensive, and almost always a better emotional process,” Hallier said.
Still, Gordon said, mediation also is slow right now as couples navigate financial woes. Although he has gotten more calls recently, he expects divorces to stall for at least the next year, until the housing market and unemployment rates stabilize.
“Mediation is a lot less economically painful than adversarial lawyering, but it almost doesn’t matter,” Gordon said. “What I am finding is, unlike other slow periods over the course of my career, this one really has people scared, because they’re looking over their shoulder about their jobs and they don’t have a large reservoir of money.”
Campbell, meanwhile, hasn’t regretted her decision to divorce. She would like to be a consultant to other women in her position (she was a stay-at-home mom when she filed for divorce) to let them know they can get through it - as long as they research all the household finances.
“At some point, you have to say, ‘I’m intelligent and I can make more money, but I can’t live in misery,’ ” Campbell said.
It’s still unclear what effect, if any, the recession ultimately will have on the divorce rate. But Phoenix attorney Bishop said one thing is certain.
“Most people, if they want a divorce, they’re going to find a way to get a divorce,” he said.
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For more information, please visit A Fair Way Mediation at: http://www.afairway.com. There is a free online evaluation form to see if mediation is right for you. Or please feel free to call us at: 619-702-9174
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