Will Divorce Bankrupt Mel B?

By July 31, 2018Divorce
celebrity divorce bankruptcy

As we discussed in a previous post, Mel B filed for divorce from her husband and former manager Stephen Belefonte. The two have children together and appeared to have a successful celebrity life – until the divorce. Now, as this article reveals, the financial costs of the divorce have become public and somewhat shocking.

Mel B normally grosses $6 million annually, yet her income has significantly dropped for unexplained reasons. On the expense side, numbers have gone through the roof. She has paid over $400,000 in support and legal fees to Stephen; over $1 million in her own legal fees with debts of nearly $1 million more to lawyers and accountants. She also owes the IRS over $800,000 in back taxes. Add in travel expenses of over $120,000, and one sees that Mel B is struggling to stay afloat. Indeed, she claims to be $3.2 million in debt. She has very few liquid assets, and the couple’s main asset is their house, which they have a net value of $3.1 million listed.

When one sees these numbers, one wonders what exactly they have been fighting for at such a cost. At this rate, the couple will have little left to divide other than debt; the divorce has already cost them at least half of their collective net worth.

Where is Stephen in all this? Since losing his manager status, he has claimed an inability to work and requires all his funds for his lifestyle from Mel B. So, he has zero income and is living off her entirely, including for his fees in the divorce.

If spending continues, Mel B may very well have to file bankruptcy to avoid losing all of her assets.

Given the financial bleeding, one wonders why they have not reached a settlement. It is possible that the anger and emotions of the divorce have taken over, fueling the legal fees. Also, Stephen has nothing really to lose with no income (though bankrupting his only source of support seems shortsighted).

We see in Mel B a cautionary tale. Many couples when they divorce let rage and revenge take over, without first scouting the actual gains on the financial statements. This divorce is a classic case of both spouses trying to win the battle only to lose the war – left with a fraction of their worth and much more bitter than when they separated. And they still have children to raise.

As noted in the article, this divorce also highlights the problem of celebrity divorces where the celebrities failed to enter a prenuptial agreement. Had the two done so prior to marrying, all of the need to fight would have been gone – everything would already have been settled by the prenup.

So, anyone thinking of divorce beware – what happened to Mel B could happen to you on a smaller scale (or larger proportionally) if emotion rather than common sense takes control of the divorce.

If you have questions about divorce, contact us – we can help.