Can You Afford to Divorce During a Recession?
Usually when a couple decide that they have tried as hard as they can and reached the decision to divorce, the next step involves dividing up the assets to allow both parties to start a new life and move into separate properties.
The house is almost always the biggest asset to sell and to share the proceeds of, and until recently most people's properties had increased in value significantly meaning that there was sufficient equity in the property for both parties to sell their house, split the proceeds, and buy two smaller houses.
However, in the current economic climate with property values falling and many houses not selling, this is no longer an option.
People cannot afford to sell their house as there may be no or little equity, or they cannot sell it even if they wanted to.
What is the solution now? Not Selling The Property The best place to start is to look at what happened during the last property slump.
Despite the media at the moment, we have been through and come out of the other side of property slumps as they tend to happen every 10 years or so to level the market out.
During the last recession the divorce courts took a pragmatic approach to the problem.
In most cases, the property was transferred to one half of the divorcing coupe completely, but on the understanding that the other half of the partnership's share in the property would become payable when the property market conditions improved.
Of course there are potential problems with this situation, the partner leaving the property has to find alternative accommodation.
What the couple must decide before taking this action is how much they can afford to pay for rental, along with how much they need to stop living together to let them start to rebuild their lives.
Summary In what is already understandably an incredibly stressful situation, couples must now take into account the property market and how they are going to manage financially until the market picks up and they can sell the matrimonial home.
Whilst this is not an easy way out of this situation, it is at least one option.
The house is almost always the biggest asset to sell and to share the proceeds of, and until recently most people's properties had increased in value significantly meaning that there was sufficient equity in the property for both parties to sell their house, split the proceeds, and buy two smaller houses.
However, in the current economic climate with property values falling and many houses not selling, this is no longer an option.
People cannot afford to sell their house as there may be no or little equity, or they cannot sell it even if they wanted to.
What is the solution now? Not Selling The Property The best place to start is to look at what happened during the last property slump.
Despite the media at the moment, we have been through and come out of the other side of property slumps as they tend to happen every 10 years or so to level the market out.
During the last recession the divorce courts took a pragmatic approach to the problem.
In most cases, the property was transferred to one half of the divorcing coupe completely, but on the understanding that the other half of the partnership's share in the property would become payable when the property market conditions improved.
Of course there are potential problems with this situation, the partner leaving the property has to find alternative accommodation.
What the couple must decide before taking this action is how much they can afford to pay for rental, along with how much they need to stop living together to let them start to rebuild their lives.
Summary In what is already understandably an incredibly stressful situation, couples must now take into account the property market and how they are going to manage financially until the market picks up and they can sell the matrimonial home.
Whilst this is not an easy way out of this situation, it is at least one option.
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