Divorce and Finances

Divorce Settlement Financial Pitfalls To Avoid

Negotiating your divorce settlement can go smoothly if involved parties avoid some serious financial pitfalls. Be sure you fully understand the terms of your settlement.

Divorce Settlement

Financial pitfalls to avoid

The process of a divorce can extremely stressful - both emotionally and financially. If you don't fully understand the terms of your divorce settlement, you may find yourself experiencing serious financial challenges. The following are two common financial pitfalls you'll want to avoid when settling your divorce.

Pitfall #1: Not protecting your credit.

Divorce can be damaging to your credit, so be sure and protect it while working through your divorce settlement. Start by getting a copy of your credit report and identify any open joint accounts that you may have with your soon to be ex-spouse. Even if the divorce settlement states that your spouse is to be held liable for any credit card debt, in the eyes of the creditor, you're both responsible for paying it in full if it's a jointly held account. If possible, try to pay off and close any joint retail credit card accounts as soon as possible to avoid future credit issues.

Pitfall #2: Failing to safeguard life insurance policies.

To ensure the value of child support, alimony, and other financial obligations, it's not uncommon for divorce settlements to require that you and/or your former spouse maintain life insurance. If you are the spouse for whom the coverage is obtained, it's important that you are notified in the event that premium payments aren't being made. For this reason, you'll want to be named as the owner of the life insurance policy if possible.

Divorce and finances can become complicated, which is why it's important that you understand how to better protect yourself. We're certainly not saying that your soon to be ex-spouse is trying to pull a fast one or that all divorce settlements are shrouded in suspicion. We're simply pointing out a couple of mistakes that couples can make during the divorce settlement process, so that you're better prepared.

Of course, if you have concerns or feel that your divorce settlement is being handled unfairly, get help from an experienced divorce attorney who can ensure that your legal rights are fully protected. You may also want to consult with a qualified financial or tax professional who can help you better understand financial issues such as any tax implications, alimony and child support that may result from your divorce settlement.

For more information on divorce and financial management, visit the Protective Learning Center.

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Divorce And Your Finances

Divorce can present emotional and financial stress. It can be challenging to understand how alimony, child support and new tax implications will impact your financial future. This article reviews some common financial pitfalls to avoid when going through a divorce settlement. For more information, visit the Protective Life Learning Center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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