This article analyzes new forms of distinction and inequality generated within Uruguayan squatter settlements as a result of neoliberal policies, class polarization, and the downward mobility of previously integrated populations that have migrated to the informal urban periphery. Based on ethnographic research in Montevideo, this article shows how newly impoverished Uruguayans have dealt with their new spatial proximity and ever-increasing socioeconomic proximity to chronic poverty through the maintenance of symbolic boundaries between themselves and the chronic poor. This boundary work is dependent on the reproduction of a series of moral oppositions, highly reminiscent of hegemonic discourses on the culture of poverty, which cast the chronic poor as dirty, lacking in values, apathetic, disorganized, and responsible for their own poverty.