Predatory lending is a big business. Everyday in Memphis and Shelby County, citizens lose wealth by depleting their equity and earnings in transactions with predatory lenders. These lenders can include check cashing outlets, pawnshops, payday lenders, car title lenders, mortgage brokers, and contractors.

Definition

There is no legal definition of a "predatory" loan in Memphis, but the Memphis DEBT Collaborative defines a predatory loan as one that "intentionally uses misleading features and marketing tactics to create a debt that results in a negative impact on the consumer, neighborhood and the community." This means that the consumer is worse off financially after taking the loan. This is because consumers are not always made aware of all of the terms and fees associated with their loans, and there have been situations where consumers were not aware that they even had loans. Consumers are also taken advantage of during vulnerable times and therefore may not make the decision that is in their best interest.

Characteristics

Predatory loans usually contain hidden fees, balloon payments, high interest rates, and/or financed credit life insurance. Predatory loans associated with home improvements often involve substandard work or the work is never completed, but the money is still owed. Many victims of predatory lending are unaware of the type of loan they are obtaining.

In almost every neighborhood in Memphis and Shelby County, there are guerilla advertisements for predatory lending, billboards, flyers, signs, and radio and television advertisements. For some citizens, a predatory loan may be the only means of accessing any credit. Unknowingly, they take out emergency pay check loans with 500% effective interest rates, predatory mortgage loans with interest rates of 20% or pay 10% of their paychecks to have it cashed.

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What to do if you think you are a victim

Visit dontborrowtrouble.com or call the local Don't Borrow Trouble hotline at (901) 432-4621.


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What to do if you want to be an advocate

MemphisDEBT Collaborative is actively working on lowering the incidence of predatory loans in our area and supporting legislation that will make it more difficult for predatory lenders to successfully market their products. If you would like to become involved in helping collaborative members determine solutions, call 901-507-6638.


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The information on this website should not be a substitute for the advice of a professional.
• Bankruptcy filings in Memphis for 2002: 28,207

• 75% of bankruptcies filed in Memphis are Chapter 13.

• 2002 - The Commercial Appeal publishes a story stating personal bankruptcy filings in West Tennessee have increased 22% over the prior 12 months.

• 2001 - The New York Times prints article proclaiming "Memphis is the Bankruptcy Capital of the Nation".

MemphisDEBT • 22 North Front Street, Suite 680 • Memphis, TN 38103 • Phone: 901-507-6638 • Fax: 901-507-6640