Save, make, understand money

Household Bills

Divorces are now easier but couples deterred by rising costs

Rebecca Goodman
Written By:
Rebecca Goodman

Monday 9 January marks the first ‘Divorce Day’ since the law changed with the introduction of ‘no-fault divorces’.

The first full working day in the New Year has been coined ‘Divorce Day’ as it’s one of the busiest days of the year for divorce lawyers.

Yet this year in the middle of the cost-of-living crisis, many couples are reluctant to go through divorce proceedings because of the costs involved.

Of those who do go through with a divorce, many are leaving out vital assets such as pensions, which can be one of the biggest assets a couple has.

No-fault divorces make it easier to separate

Changes were introduced last April to the Divorce, Dissolution and Separation Act (2020) which meant separating couples no longer needed to blame one person for the breakdown of a marriage.

Previously one person in the relationship had to blame another, such as stating they behaved unreasonably or were adulterous, or they had to legally separate for at least two years before a divorce could be granted.

But since the change was made last year, a spouse, or a couple jointly, can now apply for divorce by stating their marriage has broken down irretrievably.

This not only shortens the time it takes to get divorced, it also makes it a lot cheaper as in most cases there will be lower legal costs to pay and it can also remove a lot of stress and turmoil involved with the process.

According to official figures from the Office for National Statistics (ONS), In 2021, there were 113,505 divorces granted in England and Wales, a 9.6% increase compared with 2020 when there were 103,592 divorces.

Cost-of-living crisis putting couples off divorce

Despite the fact divorces are now technically easier to process, the rising cost of living is expected to have an impact on the numbers.

More than 30% of people said they are staying in their current relationship because they fear not being able to afford to live alone, according to one study by Stowe Family Law.

It also revealed that 89% said they had been affected by the cost-of-living crisis and 60% said it had impacted their romantic relationship negatively.

The main factors of worry for those asked were rising energy prices followed by the rising cost of food, petrol and inflation.

Over half of the 500 people surveyed said they didn’t have any financial tensions before January 2022. The study also revealed that 72% were not aware of no-fault divorces and 71% would consider a DIY divorce to save costs.

Niamh McCarthy, partner at Stowe Family Law, said: “This year, Divorce Day may not see divorces rise as much as previous years, as couples wishing to separate face the stark reality of whether they can afford to divorce and live independently in the deepening cost-of-living crisis.

“Divorce enquiries are rising, with November 2022 our highest month on record for enquiries at Stowe, up 50% on 2021, and a staggering increase of 192% compared to pre-pandemic and cost-of-living crisis times (2019). However, many couples are deciding not to go ahead with a divorce in the current climate.

“Over the past few months, I have spoken to many people asking about divorce, but who have been putting it off due to financial worries – most notably concerns about not being able to afford to live alone.”

How to navigate a divorce with rising costs

Being open and honest is one of the main tools when it comes to discussing finances by couples. Speaking about a problem early on and not letting things get to breaking point can also prevent problems spiraling.

There are also lots of independent organisations such as StepChange which can help with repayment plans and budgeting.

Putting financial plans into place is also key, such as having an emergency savings pot. This money should be in an account you can access without penalty and ideally earning interest. It can then be used for emergencies, such as a fridge breaking down or the washing machine not working, instead of turning to expensive credit options.

Protection policies from home insurance to life insurance can also be key when building up a financial safety net to avoid bigger costs down the line. Meanwhile, having a plan to pay off any expensive debts can help to ease the burden of higher costs.

For couples who have decided to divorce, McCarthy advises considering how to plan as effectively as possible for financial security when dividing up existing assets.

The main priority should be the needs of both parties and the welfare of any children as the first consideration.

Pensions not discussed by majority of couples

Pensions are often left out of divorce discussions, despite them tending to be one of the biggest assets a couple has, along with property, investments and savings.

In fact 65% of divorcees said they had not discussed pensions during divorce proceedings, according to investment platform, Interactive Investor.

But pensions are usually seen as a joint asset in divorces, even if just one person has been saving into it.

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Many divorce proceedings start with a debate over who gets the house, but pensions can be an extremely valuable asset that should not be overlooked. But our research found that 65% of divorcees didn’t discuss pensions during divorce proceedings.

“Many people don’t know that pensions are typically viewed as a joint asset in divorce proceedings – even if only one spouse has built them up. Given a pension is often the largest asset people have – often even more than their home, it is well worth making sure that is part of the conversation.”