With the property market still uncertain, businesses still failing, unemployment rising and many homeowners with mortgages in negative equity, there is certainly an impact on anyone contemplating a divorce.

Divorce rates have fallen to their lowest levels since 1981, according to the Office for National Statistics. While this could be seen as good news, it seems the credit crunch is making it more difficult for people to deal with their personal relationships.

The reduction in the number of divorces could be as a result of fewer people getting married and more people living together. Getting married is expensive but problems arise when cohabiting couples separate and then try to agree the division of property and finances.

This is particularly so during a property market downturn, which can leave them in a difficult financial position as well as facing often complex and costly litigation.

There is a campaign for law reform to give cohabiting couples more rights — but it is early days yet and the extent to which disputes will be avoided by the new legislation is uncertain.

Another more cynical view is that divorces are proving less popular because people are looking at the high profile celebrity divorces with massive settlements — the fear of which is keeping marriages (albeit temporarily) afloat — especially in a time of recession.

This could mean there are many couples in unhappy marriages feeling unable to do anything about it, due to the financial risk and consequences.

For the majority of married couples, the single most valuable asset is the family home. Due to the slowdown in the housing market, divorcing couples may be reluctant or unable to sell, forcing the couple to continue living together.

As the value of the family home falls, less money is available to re-house and due to lending restrictions it is also more difficult for one party to buy the other out.

One option is for the couple to agree to rent out the property until the housing market picks up again. The rental income would be used to pay the monthly mortgage payments and other necessary outgoings with any surplus income being distributed equally. But if they are unable to be released from the mortgage on their matrimonial home, they could struggle to raise another mortgage for a new property.

In the past, lenders have been prepared to be flexible in the mortgage multiples they are prepared to offer and terms under which they are prepared to lend, but the credit crunch means the options available are fewer and the loans often lower, if offered at all.

For business owners, the drop in the value of their businesses and liquidity problems also mean there is generally less money available.

The recession is also thought to be making divorce proceedings take longer and be more complicated. Solicitors have to continually assess the family finances — especially as share prices and property values fall.

Where there is a period of time between court hearings the marital assets, including shares and property, will need to be re-valued so that information is kept up-to-date.

Agreements negotiated through solicitors or orders made at court are open to review if they contain a maintenance claim but clean break orders, where the distribution of assets is final, are unable to be re-negotiated unless exceptional unforeseen circumstances occur.

It has recently been decided the current fall in values is not an exceptional unforeseen circumstance.

Insolvencies and bankruptcies are inevitably increasing. Any financial award made can to some extent be jeopardised even if bankruptcy occurs after the end of court proceedings. However, speed in the family courts is generally the best remedy.

Although the divorce rate has been falling for the last decade, this is largely due to the number of married couples per head of population decreasing.

In real terms, the divorce rate tends to match the property market in that it rises in good times and falls in bad times. When the property market starts moving, house prices begin to rise, people are better off and the chances are that if the marriage has broken down, they feel able to afford a separation.

We may also find that litigation by cohabitants increases to an unprecedented level when the market picks up, as the decision not to marry does not protect the couple from potential legal disputes over property and assets if the relationship breaks down.

When there is equity to fight over, litigation is much more likely than where there is nothing to be gained, other than a share of debt.

o Contact: The family team at Blake Lapthorn, 01865 254273.

Web: www.bllaw.co.uk