Increase in Divorces = An Improving Economy?

Yahoo Finance recently ran an article listing the top 10 signs the economy is on the upswing. Item Number 10 on the list was “More couples are calling it quits.” The article reported that members of the American Academy of Matrimonial Lawyers had a 37% drop in divorce cases in 2008 and a 57% drop in 2009. Although no numbers were given for 2010 or the first two months of 2011, many divorce lawyers reported that they have more business than they can handle. The article concluded the reason for the increase is due in part to credit loosening up.

There are many ways that the loosening of credit may help increase divorce rates. A spouse who operates a community property business may now be able to obtain credit to buy out the non-operating spouse’s interest in the business. A spouse who wishes to retain the marital residence (or other real property) may be able to obtain credit to buy out the other spouse’s interest in the residence.

On the other hand, if the parties decide to sell their residence, looser credit may enable more potential buyers to qualify for a loan to purchase the residence. This is particularly good news for San Diego residents who are contemplating a divorce because the Los Angeles Times reported on February 22, 2011, that the Standard & Poor’s/Case Shiller Index, which tracks the real estate market in 20 major U.S. cities, shows that San Diego is one of two cities on the Index that reflected an increase in value from December 2009 through December 2010. San Diego’s increase was 1.7%. So, not only may more buyers qualify for a loan to purchase the residence, the selling price could be higher than a year ago as well.

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