Hitched to the economy: Divorce rates drop because of cost

MarketWatch (MCT) - The recession and economic turmoil is creating a new class of casualties: Married couples who can't afford to get divorced. In these tough times, many people are finding it's cheaper to stay together, even when they can't stand each other.

"The reason that the economy has such an enormous impact on divorce is that most people in the middle-income brackets are getting by on whatever income they have. They're just getting by," said Bonnie Booden, a family law and divorce attorney in Phoenix.

A major factor in the divorce downturn, Booden said, is that divorced couples have to establish two separate households with current funds _ a prohibitive factor when you're looking at divorce in tough economic times.

Booden said one out of every two clients is seeking consultations because they can't afford to get divorced. They want to know what other options they might have.

"I tell them about the process, about the cost, and what a reasonable outcome might be. And once they hear the cost, and especially how you have to duplicate two households on the same money that currently funds one household, they try to think about some other options," she said.

Some clients have split up bedrooms and continue to live in the same house, she said. Some split child-care duties so they don't have to deal with each other and live that way until they can figure out what to do. "And I've had people who just throw in the towel and get divorces anyway, creating financial ruin for themselves," she said.

Circuit courts across the country report downturns in the number of divorce and separation filings. Cook County's Circuit Court in Chicago saw a 5 percent decrease in filings _ about 600 cases _ in the first three quarters of 2008 compared to the same period last year. Similar drops were reported in other cities across the country.

This domestic situation is also confirmed in a poll by the American Academy of Matrimonial Lawyers. The AAML surveyed its members _ all divorce lawyers _ and found that 37 percent of them have seen a decrease in the number of couples seeking a divorce, while just 19 percent saw an increase in divorce cases.

Gary Nickelson, president of the American Academy of Matrimonial Lawyers, said people are just, "toughing it out" and putting off the decision to divorce until the economy gets better.

"We're in a perfect storm as far as the divorce business is concerned," Nickelson said. "It's not a surprise to me. That's been my experience over the last 35 years. When you have an economic downturn, people are not so quick to change their situation."

Some people who come to Booden's office have come from marriage counselors, she said. By the time these couples get to her, she said, they've pretty much run out of options.

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Typically, she said she tries to arrange a deal where both parties continue to own their house. She'll split up the equity and apply an interest rate to it to make it reasonable to the person not living in the house, and then distribute the cash when the house is sold after the kids go to college.

"People have to realize the financial meltdown changed everything," she said. That sentiment is echoed by the AAML's Nickelson. "As long as stocks and financials and major assets are down, you're probably going to see a lot of people wait to file for divorce. There's a lot of fear in filing for divorce," he said. "I think that cuts across all genders, races, and all social economic ranges."

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