Time Magazine’s Belinda Luscombe recently published a piece entitled “Will the Market Kill Your Marriage?” So much of her article rings true in these tough economic times. I highly recommend reading it in it’s entirely. She does a nice job laying things on the line.
Here is an excerpt:
Not long ago, people had lots stuff (equity in homes and retirement accounts) to divide. No more. The vast majority of homes involved in a divorce are mortgaged for more than market price (perhaps 80% of our present clients find themselves in this situation) and retirement assets are worth one-half of what they worth a year ago. Tax what’s left (oh, and penalize another ten percent for early withdrawal), and then begin to discuss the $20,000 marital credit card debt outstanding. Not a pretty picture.Therein lies the dilemma.The two assets that typically need to be divided are 401(k)s and the family residence. But suddenly 401(k)s aren’t worth as much, and that home whose mortgage was the mother of all argument starters is not an asset at all. It can’t be sold – or at least not for a price that provides money to start over. Instead of working out who owns what, lawyers and mediators are trying to figure out the fiendishly trickier conundrum of who owes what. “We’re negotiating debts – not assets,” says Henry Gornbein, a family-law attorney in Oakland County, Mich. “Two, three years ago, I’d be telling you that houses had equity, and you’d either be doing a buying out or selling the house and splitting whatever the proceeds were. Now it’s the reverse. You go into court; the judges just don’t know what to do.”
The good news for families (children in particular) is that we are seeing a sharp increase in a more respectful, uncontested approach to divorce. I don’t know if that’s because there’s nothing to divide, or because people don’t have the resources to litigate.
Couples seem to be in the mood to work together. Some agree to keep one spouse in the home, but both continue to split the mortgage payments and ride out the market. They might be able to sell and break even (or even yield a profit) in a few years. Others remain business partners, in a sense, renting out their home when they vacate with a plan to sell when the market picks up. Others are agreeing to let the home go into foreclosure and banking money along the way. Still others are working with the lender to arrange for a short sale.
Elsewhere in our Blog, you will find information concerning property division, home foreclosure, bankruptcy and uncontested divorce. Always best to learn as much as you can about your options going forward.