Financial Resource Center

Money Management

Economy Inspires Parting Couples to Get Creative

by Monica Steinisch / January 17th, 2011

In survey after survey, couples place finances at the top of the list of marital challenges. It would be reasonable to assume, then, that the recession of the past few years would send the unhappily married masses flocking to the nearest divorce attorneys. But, in a 2009 survey of the American Academy of Matrimonial Lawyers, Chicago, about 37% of the group's members actually reported seeing fewer divorce cases since the last quarter of 2008. In an economy where it's not uncommon to find at least one spouse unemployed, the family home worth less than the mortgage, and monthly income and assets insufficient to cover the cost of a second household, an old-fashioned battle-of-the-attorneys divorce has become an unaffordable luxury for many couples. If you're wishing you were single again but thinking you can't afford to divorce, you'll be glad to know there are alternatives that may help you and your spouse weather the storm.

Creative housing for would-be exes

In his article, "The Great Recession's Silver Lining?" W. Bradford Wilcox, director of the National Marriage Project at the University of Virginia in Charlottesville, explains that "creative living arrangements and lower-cost legal services are making a less-than-ideal situation tolerable until [an unhappy couple's] finances improve." "Creative" refers to any living arrangement other than two separate, fully functional households. Bob Buchicchio, a marriage and divorce counselor in Montpelier, Vt., and author of "Taking Space: How to Use Separation to Explore the Future of Your Relationship," says in-house separations have become very popular. "I think that people can benefit from the structure and ground rules of an in-house separation if they can't afford a divorce," says Buchicchio. One couple he works with went through with the divorce but, for financial reasons, has continued to live on separate floors of the same house for years. To make such an arrangement work, Buchicchio recommends putting the rules—everything from household chores to whether you will attend social events together—down on paper, in the form of a separation agreement. If it will help you avoid more conflict, enlist a neutral third party—a mutual friend, minister, or professional mediator, for example—to help you hammer out the agreement details. Set a schedule to re-evaluate the arrangement. No room to spare? Buchicchio says many money-strapped spouses "hit the couch," and also make an effort to spend more time apart, perhaps alternating visits with family and friends.
Divorce has become an unaffordable luxury for many couples.
Another option that has worked for some couples is to rotate into the family home according to whose turn it is to stay with the kids. The parent who isn't scheduled to be with the children lives in a small apartment the couple rents for that purpose, or stays with family or friends.

Wide range of legal costs

The prospect of astronomical legal bills associated with divorce can keep even the unhappiest couples married. What many couples don't realize is that there are many ways to legally dissolve a marriage, each with a range of price tags.
  • Litigation—Hiring attorneys to fight your spouse in court will be the longest and most expensive route, often resulting in a five-figure tab. You can lower the cost by reducing the number of hours your attorneys have to spend unearthing financial records and other information and refereeing arguments between you and your spouse. Of course, your ability to keep attorney fees down also depends on who represents you and whether you indicate that you want an amicable divorce or you want to take your spouse to the cleaners.
  • Collaborative divorce—Collaborative divorce is so called because a network of professionals—attorneys, "coaches" or therapists, a financial adviser, and, if there are children, a child specialist—collaborates to help the couple reach a settlement that both parties think is fair. The big difference is that the attorneys are cooperative facilitators rather than fierce adversaries, and that can mean lower legal bills. Still, in some cases, a collaborative divorce can be slower and more expensive than other options—even approaching the cost of a litigated divorce. The final bill will depend on the hourly rate of the professionals involved, the total number of meetings, and the complexity of the issues.
  • Mediation—In mediation, a neutral third party will explain legal guidelines, help you work through minor disagreements, and may prepare legal documents. Mediation can be successful, however, only if you and your spouse are on amicable enough terms to be able to work out the major issues of custody, division of assets, and childcare or alimony payments yourself. Divorce mediators typically charge $100 to $200 an hour. According to FindLaw, a provider of online legal information and forms, a mediated divorce—where services are provided by an independent divorce mediator in private practice—will cost a couple with a house, two cars, bank accounts, pension plans, and three minor children, on average, $2,215. In some cases, spouses also hire consulting attorneys to inform them of their legal rights and coach them through the negotiations.
    Continued coverage under a spouse's health plan is one reason some couples stay together.
  • Self-representation (pro se divorce)—A do-it-yourself divorce is an option if you and your spouse both want the divorce, there are no children and few assets involved, there's no history of abuse, you both are capable of supporting yourselves, and neither of you has retained an attorney. Information on, an online resource for couples in the process of splitting up, directs do-it-yourselfers to the county clerk or the state court to obtain the pro se packet. The site also is one of many sources that sell state-specific divorce forms. Without professional assistance, this route could cost you just a few hundred dollars or less. If you need help completing the forms, consider hiring a paralegal service, which will be much less expensive than an attorney.
If your situation requires an attorney—because there's a history of abuse or your spouse is dishonest, for example—but you can't afford one, contact your local legal aid office to find out if you qualify for assistance. If you don't, contact the local or state bar association for guidance. If you can't get free or low-cost legal help, try to find an attorney willing to work out a payment plan. If you're not ready for a divorce but an informal separation agreement isn't enough, you can get a legal separation fairly inexpensively. "You can go to family court without an attorney—it's common—and get [spousal and child support and custody] issues resolved while married," advises Brette Sember, a former family and matrimonial attorney and mediator and a contributor to A legal separation also will divide assets and liabilities. One major advantage of an informal separation over a formal separation or divorce, for some couples, is the ability for one spouse to continue coverage under the other spouse's employer-sponsored health plan. That benefit becomes unavailable once you legally split up, and replacing coverage can be extremely expensive, especially with pre-existing conditions. Of course, continuing coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) is an option, but you only can do so for up to three years and you have to pay the premiums yourself. According to Brad Coleman, who is still living with his soon-to-be ex-wife in their Waukesha, Wis., home as they borrow and juggle to pay their divorce attorneys' fees and save enough to set up a second household, it will cost his ex $600 a month to continue coverage under his employer's health plan.
Separate credit and debt accounts when the relationship is no longer a marriage.

Untangling credit, debt

The transition from committed spouses to anything less typically includes separating finances, at least to some degree. Todd Mark, vice president of education for Consumer Credit Counseling Service of Greater Dallas, teaches an online course titled "Surviving Financial Crisis: Dealing with Divorce." During the webinar, he offers these suggestions for dividing debts, protecting your credit, and managing the day-to-day finances:
  • Obtain your credit reports. This will help you take an inventory of exactly how much debt there is, which accounts are individual and which are under both names, and whether one spouse has opened joint accounts that the other spouse is unaware of.
  • Close joint credit accounts. If there is an outstanding balance on a joint credit card, either pay it off and close the account or transfer half of the balance (or whatever amount you agree on) to two separate, individual cards, and then close the joint account. Do this with joint cell phone accounts and other service plans, too.
  • Separate joint liabilities. From a credit standpoint, says Mark, ownership is also liability. For example, your husband may be the one driving the Prius every day, but if both your names are on the title, then you are equally responsible for the payments. If you simply agree verbally that your husband will make the payments and he doesn't, your credit will be damaged and you eventually may be sued for the money. Even if the car loan is paid off, Mark points out, your name on the title and insurance policy could make you jointly liable for any accident that occurs. The same goes for a mortgage.
  • Monitor bill payments. Monitor any account that still has your name on it, even if your spouse assures you that he or she is making the payments. If he or she misses a payment, your credit will be damaged. Set up the accounts so that you can check account activity online or by phone.
"Most households have designated one person to manage the household finances," observes Mark. "The person who hasn't done that [during the marriage] needs to get up to speed." If you're unfamiliar with the daily financial tasks and lack confidence in your ability, Mark suggests taking online or in-person classes offered by your credit union or any of the many Consumer Credit Counseling Service agencies nationwide. Though it may feel as if the recession has made matters worse for your marriage, Mark says the economy actually may be a galvanizing force: It turns out that some money-strapped couples forced to work through their problems and peacefully coexist are finding their relationships are worth saving.
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