How will the current financial situation impact your divorce?
As is the case for many considering a divorce, it may be that you are second-guessing your decision in such a time of economic uncertainty. Getting a divorce can be costly, especially if the separation is unamicable, you may have many assets to split and children involved. With the cost of living rising at the fastest rate in 40 years, it is likely that those thinking about divorcing may reconsider whether they are able to actually afford it.
On the flip side, the crisis could push those on the brink of divorce to proceed with it. The impact can cause conflict and disagreements about where marital money is being spent, especially when the cost of living is increasing faster than salaries.
What can the cost of living crisis affect when it comes to divorce?
Reaching settlements: Since prices and interest rates are rising and salaries are seemingly remaining stagnant, it may be difficult to reach agreements regarding financial settlements. The sheer uncertainty of rising costs means that estimating future expenses will be hard.
Calculating the value of assets: With interest rates fluctuating, investments are likely to be affected. It is therefore tricky to accurately calculate the value of assets that fairly reflects the true market value since they keep changing week-by-week.
Deciding the best time to sell property: Property prices have risen exponentially over the past few years. But now, with mortgage interest rates increasing, people are becoming more cautious about buying and selling property. With the cost of living rising, it is not surprising that people are deciding to stay where they are rather than move in times of uncertainty. Moving house can be costly and it is not certain how much bills will cost in a new place.
As such, knowing when the right time to sell a marital home can be hard as you want to move on with a quick sale, but you also want to get a good price for it.
Maintenance payments: Maintenance payments are calculated based on the needs of each party and what is reasonably expected and affordable. If this has already been calculated and in place, individuals’ rates of affordability may be massively impacted by the crisis and therefore will affect their standard of living in the coming months. If the maintenance payments have not yet been calculated, these can be difficult to predict with the uncertainty of future expected living costs.
Moving homes: The cost of living crisis may affect whether separated couples are financially able to live separately or not. Since they have been used to sharing bills and other payments, separating these can be a big hit.
Using alternative methods of dispute resolution: Finding other methods of settlement such as mediation can help reach mutual decisions without having to go to court which can be time-consuming and costly. It is likely that many people will be considering this option to save money. Subsequently, this may lead to longer waiting times for appointments for instance.