Unhappy couples today cannot afford to split up.
Consider a typical couple I'll call Joan and Gary. The kids were stressed out by the high level of tension in the home. Both were anxious for Joan to move out, but their two incomes did not provide enough cash to pay for the rent for a separate apartment. The monthly minimum payments on their $30,000 of credit card debt compounded the problem. Their house was under water, so selling the house wasn't a viable option for obtaining cash. So they postponed separation, and Joan moved into the basement of their home to minimize their contact. Their plan is to put the house up for sale when the market improves. As their mediator, I wondered about how long this plan could work, and what they would do if the market didn't improve in the coming year.
Before the recession, divorce was easier, especially for home owning, dually employed couples. In most cases their home's value had appreciated, so the house could be sold and the equity used to pay off credit card debt many had. And there was often still enough left to provide a down payment for each to buy a smaller place.
When house values plummeted and unemployment rose, this neat solution all but disappeared. It had never been easy for couples to divide assets, like houses and retirement accounts, that they spent many years building up together. But dividing debt is even more painful than dividing assets. The problem is exacerbated when is unemployed
In today's economic climate, many couples who enter divorce mediation do not have any equity in their house, or it is under water. If they do have equity, homes in their area are often sitting on the market for long periods of time. As credit has tightened, fewer can qualify for a refinance that will enable them to buy out their spouse's share of the equity. This triple whammy leaves couples with fewer choices. One can move in with relatives, they can cut expenses to the bone, or one or both can get a second job. But part-time jobs that fit the single person's parenting schedule can be challenging to find.
Couples used to fight over who got to keep the house, but now nobody wants it due to the exorbitant costs involved. So the ties that bind may be broken emotionally, but the financial ones resist splitting. Low earners, typically the wives, blame their husbands for the need to be financially dependent on them. Often I hear, "You agreed I should stay home with the kids, and now I have no skills for any job that pays more than $10 an hour." Higher earners, typically husbands, blame their wives for not contributing enough income, and for spending too much money. "We'd be fine if we didn't owe VISA $40,000 for a bunch of electronic toys the kids don't need."
Are there exceptions? Yes, the younger couples where both partners have a college degree and a well paying job. When each person knows they can support themselves and their children on their solo income if needed, both approach separation with more confidence. Property division is also easier because each their own retirement funds, and sees no reason to make any claims on their spouse's revenue streams.
Divorce wannabees, couples that cannot afford to split up, are now waiting for the housing market to improve. Without a profitable house sale to bring in cash after separation, couples are left with several undesirable choices. Some couples are remaining in the same house, with one spouse moving to the basement. Others separate by going to stay with relatives.
Another common strategy I'm seeing is for the higher earning partner to remain in the house and pay the mortgage, while the other partner moves to a small apartment. This is the opposite of the traditional practice of Mom remaining in the house with the kids. The couple continues to own the house together, and plans to sell (and hopefully reap the profit) when the market improves. During this time, each operates on an extremely tight budget, and uses credit for urgent needs. But what if the furnace breaks and they've already passed their credit limit? It's a shaky plan at best, since no one knows when, if ever, housing values will go up.
Divorce is never easy, but during tough economic times it's downright scary.
About Roz Zinner, LCSW-C
Roz Zinner is the president of Divorce and Family Mediation Services, mediate-divorce.com, and
has mediated with hundreds of couples privately and with the Maryland courts in the past eleven years. She also helps other mediators develop successful practices through Mediator Mentor, mediatormentor.com, a distance mentoring program. She is the immediate past president of theMaryland Council for Dispute Resolution, a mediator practitioner organization.