It is a strange irony that financial woes are a leading cause of divorce as well as a leading reason couples choose to stay together. Fighting about money takes a terrible toll on a relationship, but some couples realize that a split will mean neither has the resources to start over. This became especially true after the housing bubble burst and home values tumbled — and tumble they did. In Lake County, Illinois, for example, home values have lost almost one-third of their value since January 2006.
The problem is that a house is often the most valuable asset a couple has. When it comes time to divide marital property, one spouse can keep the house or the couple can split the proceeds from selling the house. But during the recession, couples found themselves with mortgage debt that far outpaced the actual value of their homes. Selling the home would result in a net loss for both spouses. The solution, according to an unlikely source, was to stay together until the market recovered.
The unlikely source is the real estate industry. Real estate agents have noticed an uptick in their business in some parts of the country, thanks in part, they say, to couples who can finally afford to sell their houses.
With their mortgages no longer underwater, couples have more options and, importantly, more resources to start over. In the past year alone, according to Zillow Inc., the number of homes with negative equity in the Chicago metro has dropped 4 percent.
Loan modifications have also put more couples in a position to divorce. One woman, for example, says she was able to work with her lender to lower her monthly payments. She could afford the house on her own, she says, so she and her husband could split up.
Family law attorneys understand the financial impetus to stay together, but they also urge couples to explore all of their options before deciding to stay in a bad marriage. If you have questions about how to afford a fresh start, take a few minutes to talk to an experienced family law practitioner.
Source: Sacramento Bee, “Divorce and home values: Till equity do us part,” Mary Shanklin, Sept. 5, 2013Zillow Inc., “Zillow Market Overview: Real Estate – Chicago Metro,” July 2013