How to pay for divorce in a pandemic

By David Nicholson | Wednesday 3rd November 2021 | 4 minute read

When the pandemic first hit the UK in March 2020, the sudden obligation to spend 24 hours a day together pushed thousands of couples towards the brink. By mid-May of that year, inquiries to divorce lawyers had jumped by 42 per cent, compared with the same period in 2019.

Divorce settlement between couple image

That may seem shocking enough, but the uplift in unhappy couples during lockdown was nothing to the figures just over a year later. In June 2021, divorce enquiries were 136 per cent higher than at the beginning of the year – itself traditionally a peak time for separations.

“Even the strongest of marriages have been severely tested by the overall stresses of the pandemic – financial, emotional and physical,” says Sarah Havers, senior associate in the divorce department at Stewarts law firm. “Having been forced to take a long, hard look at their partners, the much-heralded promise of ‘freedom day’ has taken on a whole new meaning.”

For many separating couples – and 42 per cent of marriages end in divorce – the process is among the most painful of their lives. It can also be one of the most expensive. A recent report calculates the average cost of a UK divorce is more than £14,500, taking in legal fees and lifestyle payments. For those who need to sell property, or contest a settlement through the courts, the costs can easily mount to tens of thousands of pounds – an average couple will spend £30,000 on solicitors’ and court fees, £35,000 on rent and £144,000 on a new property.

At the top end, where properties are valued in the millions of pounds, the difference between selling in a bull or a bear market can run into hundreds of thousands of pounds.

Equally, when selling a business, market cycles, interest rates and banks’ lending appetites have a huge impact on valuations. In 2012, the Top Shop and Top Man fashion brands were valued at $3.2 billion. In 2021 they were acquired for around $300 million.

For high net worth couples, pensions and investments can add up to sizeable assets, once again involving complex calculations of value and future worth. Financial experts and lawyers may be required to reach a fair resolution – both of them expensive to hire.

As a backdrop to these divorce costs, the pandemic has added new and often severe financial pressures. Whether from reduced income due to furlough, stagnating prospects due to lack of demand, for example in the travel or hospitality industry, or reduced working options due to childcare or illness such as Covid-19 itself, many thousands of UK couples have suffered financially, just as they conclude that they no longer wish to be married.

To cap it all, if a couple decide to separate but cannot agree on a division of assets, there are lengthy queues in the courts, as a backlog of cases inches its way through, potentially meaning higher costs for both parties.

All of these simultaneous factors mean that, while divorce rates appear to be rising during the pandemic, the options for many couples are limited: a sluggish housing market, a stalled economy and rising prices have narrowed the divorce window. Should couples who wish to separate bury their differences for now, and wait for sunnier economic weather before acting? While this may seem to be sober and common-sense advice, the psychological reality of a fractious marriage can make it impossible to follow.

“When a couple decide to divorce, they often need to find large amounts of money at short notice,” says Stephen Clark at bridging finance company Finbri. “This could be to buy a new property, or to buy out their partner’s interest in the family home or business. Divorce Bridging loans can provide a solution.” Selling a property at short notice is seldom ideal: it may disrupt children’s schooling, or mean accepting a below-market valuation. The same issues apply to a business. A fire sale is unlikely to yield an optimum price.

“By using bridging finance - often secured on the value of a property - a couple can divide their assets without the disadvantages of a forced sale,” adds Clark. “Such finance can be very useful in smoothing the path towards an amicable separation and allowing people to get on with their lives.”

Four ways to minimise the cost of divorce

Where there are significant assets to divide, there are likely to be unavoidable costs in any divorce. To keep other expenses to a minimum, here are four suggestions:

  1. Have an ‘uncontested’ divorce.
    Beyond the basic legal costs of divorce – around £1,000 for the ‘petitioner’ (the person who initiates the divorce) and around £300 for the ‘respondent’ (the other spouse) - there are no other inevitable costs. If you and your partner can resolve all your financial and logistical issues, it leaves you free to retain the full value of your assets. The UK government’s online MoneyHelper website offers free advice on divorce and dissolution. 
  2. Choose mediation over court
    Instead of expensive lawyers, who sometimes appear to prolong cases in order to increase their fees, using a mediation service costing between £50 and £120 per session can save you a great deal of money and aggravation. The best-known UK organisation offering mediation services is Relate.
  3. Failing mediation, choose arbitration over court
    In this situation, a qualified arbitrator listens to evidence from both sides and comes to a decision. You can find an arbitrator on the website of the Institute of Family Law Arbitrators, with costs averaging around £3,000 shared between a couple.

  4. Do your research
    Whether you resolve your issues between you, through mediation, arbitration or the courts, do your research ahead of time. For example, the government’s child maintenance calculator will give you a monthly figure, based on your income and expenses.

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