CRUNCH TIME
Fiona Snowdon, a solicitor specialising in Family Law at Campbell Hooper Solicitors LLP, offers practical advice on what to do when you reach the end of the road in a relationship
The New Year often signifies change to
families’ domestic arrangements with, on
average, 50% more divorces being
commenced in January than at any other
time of year.
This year is no exception and
with finances being one of the most
common causes of relationship problems,
it is perhaps no surprise that couples are
being rocked during these turbulent
financial times.
A record rise in divorce has been reported in the
US since the onset of the credit crunch. Business is
booming for many US divorce lawyers with some
reports of a 40% increase in caseload. As jobs are
being lost and bonuses slashed, many wealthy
spouses are making moves to secure their share of
the matrimonial pot while they can.
On average, 50% more divorces are
commenced in January than at any
other time of year
Conversely, the divorce rate in this country is at its
lowest for some 25 years. This is unfortunately not
because we are bucking the statistical trend.
Not only is marriage on the decline generally but
estranged couples are being forced to stay living
together due to prohibitive financial circumstances.
For most, the money in the relationship is equity in
the family home which may be insufficient to fund
two properties. This problem can arise even when
there is a finalised divorce if there is insufficient
capital or income to satisfy strict lending
requirements that would enable a buyout or
purchase of an alternative property. This is not a
phenomenon confined to those earning a low
income. In fact, the demographic worst hit appears
to be middle class professionals, especially if they
have children attending private school.
Another common problem is where a settlement is
reached yet a buyer can not be found, leaving the
warring couple stranded in a shared household.
This can be particularly damaging if children are
involved. In the US, where the effects of the
recession are approximately 6 months ahead of the
UK, some have found themselves in a situation
whereby a sale of a property would result in a
division of debt rather than equity. Others have
resorted to sub-dividing the household and waiting
it out until the market improves. Anita Gill, Head of
the Private Client Department at Campbell Hooper
Solicitors LLP, has noted a growing trend in
transactions whereby sellers are being “gazundered”
(ie. the price is dropped by the buyer at the last
minute). Divorcing couples may be particularly
vulnerable to this type of exploitation if the buyer is
aware that the sellers have no choice but to sell.
The demographic worst hit appears to
be middle class professionals,
especially if they have children
attending private school
In terms of the law, the economic downturn has
meant that the goal posts are shifting, with the
concept of a clean break (buying out all spousal
maintenance claims with increased capital) becoming
less achievable for certain clients. Maria Scotland,
a barrister and family law specialist at Hardwicke
Building chambers, confirms that in practice the
search for liquidity of assets from the matrimonial pot
is getting tougher. Falling share prices, pension
scheme collapses, business failure and bankruptcy
often mean that there is very little in the way of
so-called solid “copper-bottom” assets to provide
financial security for the separating couple.
As a result and in spite of the associated costs,
couples are fighting harder in order to “recessionproof”
their finances. The “moneyed” parties are
frequently having to be less generous to their
ex-partner as they may have otherwise been due to
anxiety about their financial future. Arguments such
as pending unemployment or uncertainty of a bonus
that would once have been regarded as spurious
are now gaining more ground as a realistic
consideration.
It has become necessary for divorce
lawyers to devise more and more creative
settlements as a means of solving a couple’s
financial deadlock. In some cases, this is best suited
to the mediation and/or collaborative law forum.
These voluntary processes allow individuals tonegotiate and discuss future arrangements in the
presence of trained impartial mediators or lawyers.
Working together enables them to have more control
over finances and to reach a more amicable and
cost effective solution rather than going through the
courts.
A shift towards alternative ways of resolving
disputes in the near future may be an inevitable
result of the desire for separating couples to work
together rather than against each other.
‘Resolution’ are an organisation of over 5,000 family
lawyers committed to the constructive and nonconfrontational
approach to family disputes. They
offer some practical advice on separation as follows:
Do
- Remember that although you may no longer be
together, you will always both be the children’s
parents.
- Put the children first.
- Keep the door open to dialogue. Substitute politeness if love has gone.
- Be aware of the positive benefits of counselling in
helping you cope with your changing relationship
with your partner.
- Be ready to compromise – an agreement
between you is more likely to work than an order
imposed by the court.
Don’t
- Tolerate threats or violence. Ask your solicitor
how the law can help protect you.
- Sign or agree to anything without speaking to
your solicitor first.
- Let your partner undermine your confidence in
your solicitor.
- Expect the best of your partner, or of yourself –
aspire to reasonableness.
- Leave confidential documents where they can
be found.
If you do find yourself in this situation whereby you
require legal advice, you will first need to work out
your budget for your future legal costs and whether
you are eligible for legal aid. Most solicitors charge
by the hour depending on level of qualification and
will vary from firm to firm. It is often useful to have an
initial consultation with a solicitor to clarify what your
options are. This can be done on the basis of a fixed
fee arrangement with no further obligation. Of
course, not all situations will require legal recourse and other useful contacts are detailed below.
Fiona Snowdon is a solicitor at Campbell Hooper Solicitors LLP, who offer a range of family law services including alternative dispute resolution www.campbellhooper.com 0207 222 9070