A Fighting Chance

who lived on the edge of a small southern town with his wife and stepson: As noted previously, the data used in the bankruptcy studies were gathered under strict confidentiality requirements typical of human-subjects research protections at US universities. All data analysis was done using anonymous numerical identifiers for the study participants. When referencing individuals, names and specific identifiers have been changed to preserve anonymity. See The Two-Income Trap, 184; The Fragile Middle Class, Appendix 1.

car payment would be $105 higher than the dealer originally estimated: There are many examples of predatory car lending. Jason got caught by a “yo-yo scam,” where a car lender will not finalize the terms of the financing until after the car has been taken home from the dealership. See “Auto Lending Abuses in Dealer-Financed Loans,” Center for Responsible Lending, Issue Brief April 2011, at www.responsiblelending.org. Another common practice is for auto dealers to reach out to several lenders to whom the dealer could sell the loan. The lender will dictate the interest rate of the loan but will allow the dealer to increase the rate further and take a kickback from the increased rate. In a 2011 study, the Center for Responsible Lending estimated that consumers were paying more than $25 billion in increased interest rates to finance these dealer kickbacks. Delvin Davis and Joshua Frank, “Under the Hood: Auto Loan Interest Rate Hikes Inflate Consumer Costs and Loan Losses,” Center for Responsible Lending, April 19, 2011. Buy Here, Pay Here dealers act as lenders themselves, selling and financing used cars at extremely high interest rates and luring buyers into paying substantially more than market price for the vehicle, http://www.responsiblelending.org/other-consumer-loans/auto-financing/research-analysis/auto-dealers-lending-abuses-cost-billions.html.

rates that would make Tony Soprano blush: According to a 2009 study by the Federal Reserve Bank of Kansas City, the average annual percentage rate (APR) on payday loans was 451 percent. See Robert DeYoung and Ronnie J. Phillips, “Payday Loan Pricing,” The Federal Reserve Bank of Kansas City Economic Research Department, Table 1 (February 2009), available at http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp09-07.pdf . See also Carolyn Carter et al., “Stopping the Payday Loan Trap,” National Consumer Law Center, 4, Appendix A-3 (June 2010). (APR for typical payday loans varies from 391 percent to 782 percent.) in a journal called Democracy: See Elizabeth Warren, “Unsafe at Any Rate,” Democracy 5 (Summer 2007): 8–19.