Richer Married, Poorer Divorced
It’s a “for richer or poorer” kind of thing. You’re richer as a married couple. And, often, significantly poorer if the marriage breaks up.
“The majority of people who come to see me for bankruptcy are divorced or separated,” says Marc Gertz, an attorney in Akron, Ohio. “It’s the old point of the chicken and the egg. Which comes first? Domestic and family problems go hand in hand with financial problems.”
Whatever caused it, when it’s over, it’s over. But a disastrous marriage doesn’t necessarily mean a financially disastrous divorce. Knowing what leads to financial ruin after a failed marriage may help you avoid it. When people marry, they start acquiring homes, furniture, cars - the accouterments of an adult life.
“People generally start to acquire credit in a big way when they get married and not before,” says Robert M. Whittington Jr., an Akron attorney.
Gone are the pine planks supported by cinder blocks that used to hold the books and stereo equipment. In comes the $1,000 home entertainment center.
The cold-pizza breakfast on the rickety stool in the apartment’s galley kitchen is no more. Now it’s a hot breakfast on the new china at the Arhaus table in the breakfast nook of the house in a nice subdivision.
“Generally, marital debts have to be divided (in a divorce), but the income is not proportionate,” Whittington says.
Then there is the revenge factor.
When a relationship has hit the skids, one spouse may try to rack up debt in order to punish the other spouse, says Gertz.
“A lot is emotional and visceral,” he contends. “People in many cases want to pass their financial burdens on to the ex-spouse.”
Then there’s the most expensive acquisition of all - children. Kids cost. And when marriages break up, the cost of those children isn’t always covered for a custodial spouse, or can be a drain on the finances of the non-custodial spouse.
Women, Esther M. Berger believes, bear an undue financial burden when a marriage breaks up. And, she says, and children are a big part of that because women often don’t receive adequate child support.
Berger, a certified financial planner and author of “Money Smart Divorce,” believes that the financial hardship caused by divorce can be mitigated through proper divorce planning.
“Record-keeping is important,” Berger says. “Jot down what you are spending to the extent that you can substantiate what your living needs are.” Keep track of what you contributed to the upkeep of the household while your spouse was in school, she advises. If your spouse built a business, keep a record of how you enabled him or her to do it.
But rather than finding yourself facing divorce and wondering how you can keep your financial life intact, Berger says, it’s better to check out your potential partner before you tie the knot.
“People make extensive inquiries about a prospective partner’s health - AIDS and other sexually transmitted diseases - and it’s considered socially acceptable,” she says. “It should be equally as socially acceptable to inquire about a partner’s financial health.”
Whittington sees similar problems with his bankruptcy clients - they are in the dark about their ex-spouses’ financial situation. “When they come to see me they say they had no idea that the other spouse had run up that much debt. Of course, it’s always the other spouse,” he says.
A bankruptcy can be the last joint act of a couple. “It’s cheaper and easier to file as a joint bankruptcy case before the divorce,” Whittington says.
Gertz agrees, but realizes that couples who aren’t getting along are going to have a hard time with a cooperative bankruptcy.
“I stress that while working on a bankruptcy, ‘You are a couple,”’ Gertz says. “But you get people who can’t agree if it’s cold outside, so it’s tough to deal with them logically and rationally.”
Many times not being logical and rational is what leads to the problem in the first place.
“Marriage is a love relationship, but it’s also a business relationship,” says Berger. “Approach it with your heart and your head to avoid trouble later on.”