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RISE Foundation Combats Bankruptcy
Nonprofit works to teach citizens about alternatives

by Andrew Bell, The Daily News

Organizers at the RISE Foundation are hitting the road in an effort to combat one of Memphis' toughest problems.

RISE, or Responsibility, Initiative, Solutions and Empowerment - a nonprofit organization created three years ago as a Memphis Housing Authority initiative - hosts its first public meeting next month at a church in South Memphis to address financial difficulties that lead to personal bankruptcy.

An area epidemic. The Memphis metropolitan area is generally ranked as having one of the highest bankruptcy rates in the nation.

According to The Daily News Public Records Database, in 2003, bankruptcy filings in Shelby County totaled 24,744. Of those filings, 17,045 were Chapter 13, or wage earner, cases; 7,627 were Chapter 7, or liquidation, cases; and 72 were Chapter 11, or reorganization, cases.

Saralyn Williams, recently hired by RISE as coordinator of the Memphis Debt Collaborative, said loss of income, health problems and divorce are three of the biggest factors that contribute to bankruptcy filings.

"For some reason, Memphis has a high rate for those three things," Williams said. "It has often been called 'the perfect storm' for bankruptcy."

Education on the road. The foundation's public meetings, dubbed the Traveling Road Shows, will run throughout 2004 with one or two dates scheduled every month in various areas of the city at community centers, schools, churches and other facilities near public housing communities.

With the help of a $250,000 grant from the First Tennessee Foundation, RISE is recruiting the help of a credit counselor, a bank manager, an attorney and representatives from the Memphis Fair Housing Center to conduct the Traveling Road Shows. The group hopes to provide answers that will correct a lot of wrong assumptions people have about bankruptcy and its ramifications.

A better understanding. During the series, RISE hopes to gain a better understanding of the types of problems people have experienced that have led them to file for bankruptcy or to consider it.

To do so, RISE plans to study local bankruptcy trends with the help of Bankruptcy Court Judge Jennie D. Latta. The foundation also plans to conduct a study with the help of local advertising agency Conaway Brown and the University of Memphis' Financial Information and Research Center.

The yearlong analysis, which will study 1,000 participants in various stages of the bankruptcy process, will be based on a study completed by Harvard professor Elizabeth Warren that focused on Nashville, Chicago and other cities.

"We want to talk with people before they file, those during their filing and those who have completed filing," Williams said. "We want to know their feelings, thoughts and fears at the various stages."

At some point in the process, RISE plans to establish a Bankruptcy Resource Directory and make it available to the public.

Alternatives to bankruptcy. The RISE Foundation's efforts are based partly on the belief that many people who file for bankruptcy do so unnecessarily.

In other cases, predatory lending practices play a part in people's bankruptcy decisions, as many fraudulent lenders focus their advertising on the segment of the population most vulnerable to poor credit.

As such, predatory lending is another area the Traveling Road Shows will examine.

Williams said in all areas, the best way to tackle bankruptcy-related problems is through education.

"Right now, one of biggest problems is that people aren't as educated as they should be, and they are bombarded (with media messages) telling them that if they are in trouble, file for bankruptcy to consolidate their debt," Williams said. "There are not enough alternatives and facts being promoted."

Financial impact. RISE Foundation president and chief executive officer Beth Dixon said it's estimated that it costs the community $450 for each local bankruptcy filing, noting that bankruptcies occur in every segment of the population and are not limited to low-income public housing residents.

She said a secondary goal of RISE Foundation programming is to help dispel stereotypes.

"Instead of thinking that these problems are limited to low-income people, we're saying that this affects everyone," she said. "(Low-income citizens) have been for many years seen as the last place to get answers but the first to cause problems. But having worked with them and having seen the interest they have in learning how to become self-sufficient - and the ways they've done it - they're changing that old perception to, 'What can we learn from them?'

"It's an exciting change of paradigm."

• Compare interest rates. Predatory lenders rely on the fact that you won't do your research before signing a contract.

• Contact the Better Business Bureau before loaning money, to make sure the company you're doing business with is reputable. Click here to visit the Midsouth Better Business Bureau website.

• Be wary of making quick decisions. Repairs to a car or a home can cause such anxiety that consumers often go with the first offer without considering the financial effects.

• Predatory Lending in the News: Memphis Needs Relief From Epidemic of Predatory Lending from The Commercial Appeal

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