News
Credit crunch could deter divorcing couples
Release date: 20/05/2008
Falling house prices and stricter lending criteria could deter divorcing couples.
Given the family home forms the cornerstone of most couples' main assets, it may have to be sold as part of a divorce settlement.
Add to that increasingly strict mortgage lending criteria being imposed by most high street banks, a slowing housing market, and the impact of the credit crunch could soon make it harder for couples to opt for divorce.
But there may be ways around it, says Katherine Marshall, a leading collaborative and family law specialist with Midlands' law firm Harvey Ingram.
"Clearly the impact of the credit crunch could soon see couples opting to defer divorce proceedings until the market picks up. If proceedings are already underway, then couples may be forced to live largely separate lives under the same roof, for an extended time period, until they sell their house for what is regarded as an appropriate price.
"However with the help of a collaborative family lawyer, a mutually-beneficial agreement could be drafted that suits both parties. For instance, the sale could be deferred for a set period, say until all children have left home, by which time house values may have picked up again. The husband could move out, but register a legal charge on the family home to ensure he gets a pre-agreed share of the proceeds of the sale, as and when it's deemed the right time to cash in the main asset.
"The key point about collaborative agreements is full and frank disclosure of assets and priorities between each party. It's a relatively new way of resolving disputes, but it avoids court, it's flexible and helps ensure agreements can be reached without having to be driven by a court-imposed timetable.
"Of course the flip-side of the impact of the credit crunch is that it still may prove mutually beneficial to press ahead with a divorce. Even if the family home was sold at a slightly lower price than may have been achieved a few months ago, both divorcees should be in a good position buy another home as there are bound to be bargains to be had elsewhere."