Surviving a divorce in tough times

(ARA) - Divorce is a difficult and gut-wrenching decision that would keep anyone up in the middle of the night. In today's tough economic times, when one spouse may depend heavily on another spouse for financial support, or a couple is saddled with a mountain of debt, the decision to end a marriage or domestic partnership can seem particularly difficult, even if the marriage has become intolerable.

Regardless of how bad the economy is, or how broken a couple's finances are, it's important for a couple to understand that they do have options and that staying in a broken marriage does not have to be one of them. Spouses who stay at home or earn less than their counterparts may feel they are at a terrible disadvantage in this economy as unemployment rates climb. But there are options, and there are ways to prevent one person from carrying the entire debt load from the marriage.

Anyone considering divorce, with or without significant debt, should speak with an attorney experienced in family law, as well as tax law. It is important to understand all the consequences any type of debt discharge will have, not only in terms of the divorce, but also in terms of a couple's financial and tax obligations, according to FindLaw.com, a leading online source for legal information. Going through a divorce is difficult enough without the Internal Revenue Service notifying you that you owe taxes on unreported income or are being audited.

Here are some additional tips from FindLaw.com if you are considering a divorce during tough economic times:

* Consider alternative dispute resolution. Rather than litigation, some couples may want to consider working with a trained mediator to help them settle their divorce outside the courtroom. The process provides a binding decision in a short time frame, with or without attorney involvement, generally at a lower cost.

* Dividing your assets. One of the biggest issues in any divorce is how to divide the property. Divorce laws from state to state vary. Some states, such as California and Arizona, are marital or community property states. This means that any assets accumulated during the time of marriage, ranging from retirement accounts and investments to homes, cars and furniture are community property and will be divided equitably between the spouses. Even if the property acquired during the marriage is only in one spouse's name, it is presumed to be community property. Certain types of property generally are not considered community property, such as any property owned prior to the marriage and any gifts, such as jewelry or an inheritance left to only one spouse.

* Debt is community property too. Debt incurred during the marriage is also community property. This means that even if the divorce order requires one spouse to pay off a certain debt, the other spouse still remains legally responsible for the debt and the creditor has the right to go after both spouses for repayment of the debt. In some instances, creditors may agree only to go after the spouse named responsible for the debt in the divorce decree, but creditors are not required to do this. Thus, even after the divorce, one spouse has the ability to influence the other's credit.

* Update your finances. The average divorce process can take up to a year or more. During this time, as assets are being divided, it is important to keep abreast of your financial status and to update your divorce attorney about the values of your assets.

* Salary cuts and child support. Soon-to-be divorced couples should take a realistic approach to alimony awards and child support obligations based on child custody. In addition to setting up two households, the reality is that salaries are getting slashed, jobs are being cut and bonuses are becoming rare.

* Selling your home. In most divorce cases, the family home is the most valuable asset. It's difficult thinking about selling the home you bought together even in good times, but it can be downright painful when home property values have dropped so much within the past two years and when there are fewer people in the market to buy a home. However, if circumstances allow, it is possible to negotiate an agreement for the sale of your home at a later date when the market becomes more favorable.

* A last resort. Sometimes a divorcing couple may be so underwater between mortgages and credit cards that they may want to declare bankruptcy (Chapter 7 or Chapter 13). Other choices include allowing the lending institution to foreclose upon their home and retake possession of it, or possibly entering into a short-sell arrangement with their bank, in which they make a deal with the lender to sell the house for its worth and upon completion of the sale, the lender takes all proceeds and marks the homeowner's loan paid in full. However, these options should not be taken lightly and should be considered only after consulting with a bankruptcy attorney as they will affect the credit ratings of a divorcing couple long after they've parted ways.

To learn more about divorce law, visit www.findlaw.com.

Courtesy of ARAcontent