12:01am

Thu February 10, 2011
Your Money

For Some Couples, Economic Indicators Say Split

In a grim sign of the economic recovery, the divorce rate, which dipped during the recession, appears to be on the rebound.

Divorce is expensive, so when the economy tanked, a lot of unhappy couples decided it just wasn't the time to split. Some held off when they couldn't sell their home. Federal figures suggest the divorce rate fell about 7 percent between 2006 and 2009, and divorce lawyers across the country saw business dry up. But that's changing.

"I would say that over the last six months, the activity in our firm has probably picked up by 20, 25 percent," says Sandy Ain, a divorce lawyer in Washington, D.C.

In fact, Ain is getting so many calls that he can't handle them all. He sees several reasons for the uptick.

"One is the credit markets are actually loosening up," he says. "Banks are starting to lend money again."

That means someone can borrow money to buy out a spouse — to pay for one's share of the house, for example. Or, as is common for business owners, to give a spouse his or her legal share in the family enterprise.

Another big change is that the stock market has nearly doubled from its darkest days. When retirement funds and savings accounts are fatter, people feel more secure striking out on separate lives.

Finally, there is simply pent-up demand.

"When a person is ready to have a divorce, they generally don't like it to take two or three or four years to get finished," says Linda Lea Viken, president of the American Academy of Matrimonial Lawyers. "So I think there's a part of the population who just doesn't want to wait anymore."

Still, crude as it seems, the business cycle can play a crucial role in a divorce settlement. Some lawyers say they've been advising certain clients to put off separation during the down economy. Viken says that whether now is the "right" time depends on several variables.

"If a person receives a business, for example," she says, "and the other person receives a house, the value of those two assets is extremely important in determining what else happens."

That's because the aim is often a 50-50 split of a couple's assets. So if, say, a man receives a business that has declined during the recession, giving it less value, he'll likely get to keep more of the couple's other assets. And that property settlement is final — there is no re-doing it once the economy rebounds and that business, or house, is worth a lot more.

Viken says there is something else to consider. It used to be that if your ex-spouse took over a joint credit card or mortgage after a split, the bank or lender would take your name off the contract. But Viken says they've largely stopped doing that since the recession hit.

"They want to be assured that they have two people they can go after for these debts," she says. "So if the other person defaults on it, you may not even know that — and yet your credit's going to be affected, and eventually you're going to get that phone call about this huge debt that hasn't been paid."

Overall, divorce has been on the decline in recent years. And Brad Wilcox of the National Marriage Project says a lot of couples report that the recession actually strengthened their union. Still, money woes are notoriously tough on marriages, and Wilcox says the recession has hit lower-income Americans hardest.

"My view is that as we move forward, we're going to see the long arm of the recession reaching out and grabbing working-class and poor couples a lot more than college-educated and more affluent couples," he says.

In a survey released this week, Wilcox finds that married people without a college degree are twice as likely to say they are thinking about divorce. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.