One of the things I’ve begun to see in my divorce mediation practice is the difficulty of equitable distribution with martial homes that have little equity value, no value or even negative equity.  These are situations where the value of the mortgage(s) plus any home equity loans exceed the market (sale) value of the home.  So to sell the home pursuant to a divorce, the couple would need to potentially take a loss and then have no money coming from the sale for a downpayment on a new home.  In the “good old days” (2007 into early 2008), this wasn’t a problem as most people had equity in their homes.  Thankfully, I haven’t had any divorce clients who are facing foreclosure, but I am sure that will be coming.

There are ways to work around equity problem and mediation is often helpful in doing so.

Two recent articles have addressed the problems this has caused.  The first is an AP article about couples staying together because of the economic times.  One couple in the article is described as living in the same house, not speaking to each other except through their lawyers.

Despite the close quarters, the couple rarely cross paths. Linda Melville said they hadn’t spoken to each other for a month before meeting about their divorce in late November. “The only conversation that takes place is via the lawyers,” she said. “Even negotiating a day to do laundry.”

I’m not sure how they can afford lawyers to do the talking but can’t afford to live apart or sell the home.

The other article is the opposite happening in China. Reuters reports:

Fears of a prolonged recession in China have triggered a sharp increase in divorce inquiries addressed to lawyers and financial advisers, state media reported on Monday, with timing a key issue.

Wealthy spouses were keen to strike a deal while asset values were low, the China Daily quoted the director of the China Divorce Service Center, Shu Xin, as saying.

Divorce has been on the rise in China, with 7 times the amount in 2007 as in 1980.

If you’re considering a divorce but do not think you can afford it, you may want to consider mediation.