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Deferring Divorce In Hard Times

Hard times are doubtless putting a strain on a lot of marriages, but many couples may have to put up with one another longer than they would like.

The Washington Post recently reported that divorce rates declined in 2008, as the financial crisis spiraled into the worst recession in generations.

David Goldberg, a divorce lawyer and mediator in Gaitherburg, Md., said that in his 44 years of working in family law he has never seen so many divorces stalled because of financial reasons. “I have lots of files sitting in the drawer, where people can’t move forward,” he said.

Getting divorced generally requires dismantling one household and creating two separate households in its place. That can mean buying a second home or a second car in addition to another bed and another TV. For those who have lost jobs and spent their savings, these things may not be feasible, forcing the estranged couple to reluctantly continue pooling resources.

The poor housing market has also left many couples unable to sell their shared homes and move on to separate lives. Couples who owe more on their mortgage than their home is worth cannot simply sell the house and split the proceeds. There would be no proceeds. In fact, the would-be-sellers might have to bring extra money to the closing unless they could persuade their lender to agree to a short sale.

Because some states require couples to live in separate homes during a mandatory period of separation prior to divorce, couples may be unable to divorce if neither individual can afford to move out. “What we're seeing is some people are postponing divorce because home values have dropped,” said Brad Wilcox, director of the National Marriage Project.

In the recent recession and nascent economic recovery, divorce has become another area of pent-up demand. When consumers struggle to make ends meet, they put off whatever expenses can be delayed. Automobile sales had their worst month since June 1982 in January 2009. At the start of this year, new home construction was still about 75 percent lower than at the peak in 2006. And in 2008, 18,000 fewer couples got divorced than the year before.

Andrew Cherlin, a Johns Hopkins University sociologist, told The Post that there was a similar drop in divorce rates during the 1930s, followed by a sharp uptick as the Great Depression ended. He predicted that the same thing will happen again as the economy recovers, observing that there is probably “a backlog of unhappy married couples who would like to get a divorce soon but can’t afford it.”

As families’ finances improve, some couples may realize that things are not as bad as they seemed and decide to stay together after all. But many others will likely go ahead with their plans to divorce once they have the means. Newly divorced individuals will join others at the stores, finally making purchases they were forced to defer, providing a subtle boost to the economy as they buy what they need to start their lives apart. These purchases, particularly in the housing market, may provide the lift necessary to allow other couples to sell their homes and divorce as well.

Once the wheels of economic recovery are in motion they will continue to turn, and we will be able to get on with our lives — together or apart.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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