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Part 1, 2, 3, 4


Alternative financial centers proliferate in Memphis neighborhoods like White Haven. This hamburger stand doubles as a rapid refund tax preparer.
Photo by Chris Farrell

Then there is debt. Lots of it. It starts out with a more appealing name: credit. Historian Daniel Boorstin quipped that the American standard of living was bought on the installment plan. Still, three decades ago it was much harder to borrow money than today. Americans are bombarded daily by pitches for car loans, mortgages and credit cards.

The so-called "democratization of credit" has benefited most Americans. Credit that once was limited to the well-heeled now gets offered throughout society.

"It's been a policy, a public policy in this country to encourage that, to make more credit available to lower and moderate income people, to people starting out, to minorities," says Ed Yingling, president of the American Bankers Association. "You do have more credit available to more people and the end result is you do have somewhat more bankruptcies because of that."

The modern credit economy comes with a price tag. The tab is visible in South Memphis.

Sheila Terrell teaches personal finance to low-income Memphians.

Some of the stories told in the bankruptcy building started in scarred neighborhoods like the one she grew up in, places that have seen better days. Here, financial predators target people with meager incomes.

"It looked very different when I grew up," she says. "Of course, that was a few years ago. The landscaping is totally different now. You have a lot of liquor stores here now. There are some cash-in-advance, check-into-cash places."

Terrell says the check cashing start to move in about ten years ago. She points out that the businesses she grew up with, like an appliance store, are closed. Instead, high-priced lenders dominate every strip mall.

"There's another check-into-cash place," she says as we drive past. "Actually, there was a McDonald's where the Shell is, at one time. Have you ever known a McDonald's to close?"

"There was a McDonald's right here on the left," says Terrell, pointing. "The houses are dilapidated."

She says the area has become a lot poorer.

Continue to part 4