Will debt let us part?

DIVORCE: The property crash has left many couples who want to divorce with no option but to live together

FOR RICHER, for poorer – those well-meant wedding vows are now coming back to haunt couples whose marriages have broken down beyond repair, but who remain shackled together by debt, negative equity and a stagnant property market.

Family law practitioners are reporting that growing numbers of estranged couples simply can’t afford to get divorced and move on with their lives. As a result, it’s increasingly common for people to find themselves trapped in the nightmarish situation of living with a hostile ex-spouse.

One solicitor tells of a couple who live entirely separate lives under the one roof, together with their only child. After a “massive row”, the wife made an unsuccessful application for a barring order. The husband now lives in his bedroom watching TV with the door locked, while his wife has a designated living area downstairs. They each have agreed times for using the kitchen, and they don’t speak to each other.

Unfortunately, most of the avenues open to couples splitting during the boom years – such as generating enough money from the sale of the family home to establish two smaller households – have closed. “Even if people could sell their house, it won’t clear their mortgage, never mind buying two other homes,” says solicitor Aileen Fleming, who volunteers for FLAC (Free Legal Advice Centres).

And even if one party is in the position to buy out their ex’s share of the house (perhaps with the help of a family member), banks are now very reluctant to facilitate this solution, as they prefer to keep two names on the mortgage. Furthermore, moving into that city-centre pied-à-terre that so many people bought in recent years is rarely an option for husbands or wives leaving the family home now, as the rental income from such investment properties tends to be desperately needed to cover the mortgage.

A vital consideration for separated couples who find themselves with no option but to stay put, is that they must have “lived apart” for four out of the previous five years in order to qualify for a divorce. Fortunately, in the eyes of the law it is possible for people to live apart even if they share the same front door, but a number of factors will be considered to establish whether or not this is the case. For example, a couple may still be considered man and wife if they share a bedroom, socialise together, or cook meals or wash laundry for each other.

Muriel Walls, who leads the family law team at McCann Fitzgerald, advises clients to sit down with their ex-spouse to reach an agreement as to when exactly they began living separate lives (and perhaps even draw up some legal documentation to that effect), to ensure that they satisfy the four-year rule.

Another major problem created by the recession is that a growing number of people who have already gone through a divorce can no longer afford to pay maintenance, because of reduced hours, pay cuts or losing their job. If a couple has dependant children, then their divorce settlement will often require the main breadwinner (typically, but not necessarily, the husband) to make regular maintenance payments to support their children, sometimes on foot of a court order.

“A lot of guys tend to put their head down in the hope that it all goes away,” Campbell says. Sometimes clients won’t face up to the issue until “very late in the day”, she says; for example, after a motion for their committal to jail has already been made. She advises people to apply to court to vary the maintenance order as soon as they realise they have a problem. Fortunately judges are being reasonable in these cases and will reduce the maintenance amounts if the person no longer has the means to pay the original amount.

Situations where the court has ordered the sale of the family home, and has set a reserve (minimum) price for the property, are proving equally problematic. “Those reserves are coming apart because the property market has stagnated and houses can’t be sold,” Fleming says. Furthermore, some divorce cases have been settled on the basis that one party would sell shares to pay a lump sum to their spouse, but those shares may very well have plummeted in value in the meantime.

Walls, whose clients include many middle-class businessmen, has observed that many people are just about “keeping things ticking over”. For example, a lot of mortgages are on interest-only repayment schedules at the moment.

“When acting for husbands there’s a real sense of frustration – they’re desperately trying to keep the show on the road and keep their business going and don’t have time to think . Often wives have unrealistic expectations in relation to their standard of living,” she adds. “There is a bit of time delay in accepting reality.”

However on the flipside, anecdotal evidence suggests that some wealthier spouses are taking the cynical view that this is a great time to get divorced. House prices, expectations and maintenance entitlements are all likely to be lower because of the current economic climate, and some people are weighing this up, according to one solicitor.

But for people who have lost their jobs, this is definitely not a good time to legally end a marriage, as they are unlikely to be able to afford the services of a family law solicitor. Although they will qualify for free legal advice from the Legal Aid Board if their annual income has dropped below €18,000, this system has become increasingly clogged due to a combination of a recruitment ban and increased demand. In some cases, people will have to wait for at least a year to access this service.

Perhaps surprisingly, DIY divorce providers who offer to process straightforward, uncontested divorces for a few hundred euro (as opposed to the thousands charged by solicitors), have seen a decline in demand. Cathy O’Brien of diydivorce.ie has noticed a 50 per cent fall-off in business since early 2009, and attributes this to the fact that people are “looking at their finances and what has to be paid and what can be put off” and are deciding to hold off.

However, she predicts that in four years’ time (after the requisite separation period), there will be a significant increase in divorces, due to the number of marriages currently disintegrating under financial pressure. “Especially with marriages that are already struggling a little bit, money problems really show up the cracks,” she says.