The Impact of a Voluntary Vehicle Surrender

[cwericb]

Unfortunately, sometimes people encounter a disastrous financial situation that makes it impossible for them to live up to their obligations.

 

However, anyone who would intentionally default on a loan given in good faith, simply because it is to their advantage to do so, is a disreputable, untrustworthy, dishonest, despicable individual.

 

No honest person would disagree.

[Parsad]

Unfortunately, sometimes people encounter a disastrous financial situation that makes it impossible for them to live up to their obligations.

 

However, anyone who would intentionally default on a loan given in good faith, simply because it is to their advantage to do so, is a disreputable, untrustworthy, dishonest, despicable individual.

 

No honest person would disagree.

 

That's ridiculous!  People default on all sorts of loans and due to various circumstances.  I'm not going to judge what an individual chooses to do and is within the law.  Credit reports are there for people to know what type of borrower they are dealing with, and contracts are there for buyers to understand what their obligations are and what recourse there could be against them if they default.  If two parties understand their risks, work within the law, they have remedies available to them.  I shake my head when consumers do stupid things, but at the same time, the system and laws are in place, as long as they are acting within that system...no one can light a candle saying morality is dead!  Individuals, corporations, organizations, institutions all take advantage of the loopholes!  Close the damn loopholes!  Cheers!

[Gregmal]

Its also important for counter-parties to understand what they are dealing with. The reasons corporations suck, is because its streamlined policy and procedure, and there is nothing personal about the relationship. In a person vs person transaction, there can be sympathy and understanding. When people are reduced to numbers as they say, and no one is responsible for the relationship, it just defaults to going by the book.

 

That said, as a landlord, I generally try to be understanding and treat others how I want to be treated. However every time I try to be the nice guy, and make exceptions or give people a break, it almost always turns out to be a mistake and people often take advantage of this. Overlook someone with a shit credit score because they have a good story and a nice family? You almost always end up running into issues with then. Let someone hand in the rent a week late without penalty...not too long after they are 2-3 weeks late. Tell them they can deduct discretionary improvements to the unit up to $100 a month(ie new thermostat, Faucet for sink, etc) and every month theyre spending $95. Say you're open to letting them exit a lease early? Then they bail on it anyway and say, "keep the 1 month security deposit"...

 

So from experience, you kind of have to straddle the line of being a dick. Just enough to keep people honest. Otherwise they tend to take advantage of you. And when its your wallet vs theirs, all you have to fall back on is the integrity of the person and contract you have in writing.

 

I think the world would get really ugly, really quick, if everyone acted like a vampire squid WS banker.

[bizaro86]

Its also important for counter-parties to understand what they are dealing with. The reasons corporations suck, is because its streamlined policy and procedure, and there is nothing personal about the relationship. In a person vs person transaction, there can be sympathy and understanding. When people are reduced to numbers as they say, and no one is responsible for the relationship, it just defaults to going by the book.

 

That said, as a landlord, I generally try to be understanding and treat others how I want to be treated. However every time I try to be the nice guy, and make exceptions or give people a break, it almost always turns out to be a mistake and people often take advantage of this. Overlook someone with a shit credit score because they have a good story and a nice family? You almost always end up running into issues with then. Let someone hand in the rent a week late without penalty...not too long after they are 2-3 weeks late. Tell them they can deduct discretionary improvements to the unit up to $100 a month(ie new thermostat, Faucet for sink, etc) and every month theyre spending $95. Say you're open to letting them exit a lease early? Then they bail on it anyway and say, "keep the 1 month security deposit"...

 

So from experience, you kind of have to straddle the line of being a dick. Just enough to keep people honest. Otherwise they tend to take advantage of you. And when its your wallet vs theirs, all you have to fall back on is the integrity of the person and contract you have in writing.

 

I think the world would get really ugly, really quick, if everyone acted like a vampire squid WS banker.

 

Yeah. I manage my rentals, and one for my parents. I charge a late fee, and put that in all my leases. My parents' tenant paid late with a sob story about 6 months after moving in, and my dad insisted on waiving the fee. This tenant has never paid on time since in the intervening 2 years.

[Cigarbutt]

when such a high and rising percentage of trade-ins carry negative equity

Used car value recent price index trend... 

wabuffo

What's your point?

[Spekulatius]

Just an observation.  I find it odd that (with some exceptions) you can tell the political view of people by what they think of being honest, keeping your word, and paying your debts.  Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal?  It's just a wealth transfer to them from a big bad corporation to a nice little granny.  Politics poisons everything in your worldview.

I would not consider myself a liberal (or a die hard conservative)

A secured non-recourse financing is an agreement between the lender and the borrower where the lender/borrower have agreed upfront what the security for that loan is and the simplicity and transparency of that arrangement underlies much of the financial innovation of the past few decades (securitization).

I see nothing wrong with handing back keys / strategic default. the lender took that risk and charged you for it.

My understanding is that the typical car loan is secured and recourse. So, if there is nothing wrong in handing back the keys, there is nothing wrong for the holder of the newly declared delinquent loan to go after (to obtain (through a legally-supervised process) reparation) the individual's assets or earning power for the excess value not covered by the collateral. There are personal responsibility issues that are being dealt with by the present rules of the game.

However, one has to wonder about the rules of the collective game when such a high and rising percentage of trade-ins carry negative equity. Where are we failing on top of poor individual choices? It's not an easy question. Easy credit conditions are a sign of development, innovation and sophistication but easy credit conditions are also punctuation marks in the credit cycle. At this point, who's bearing the actual risk? i would venture to say that we all are and that's not necessarily comforting?

Securitizations are great but they increase the distance (and put a number of intermediates) between the person who needs the funds and the one who provides them.

 

Yes, car loans are generally recourse. So in this case, there is the possibility that the lender might go after the delinquent counter person’s other assets. Usually, they don’t do that, but that possibility should definitely within the expectations for the outcome.

 

Personally, I wouldn’t judge whatever someone is doing. I know some friend of my wife who defaulted on their mortgage post financial crisis. This was in a non recourse state and based on the rough numbers they gave me (deep underwater in equity, teaser loan with balloon payment coming up), I recommended them to default, which they ended up doing (I think they got the same advice from other sources).

In the case discussed here with only 9k at stake and a recourse loan, I wouldn’t recommend it just for practical reasons, as a shot credit can create major inconveniences  for you that most people don’t take into account etc.

 

But each it’s own.

[Jurgis]

Some years ago a relative of mine was lured into one of the MLM schemes (might have been Herbalife, I don't remember) and signed some commitment to buy their crap for X months. They realized the f*ckuppery when they got the first delivery. They took the package to one of their "seminars", left it there, and told them they won't pay for anything they send. IIRC they did not get any more deliveries and were not forced to pay for their commitment.

 

Also, since we are talking about car dealership scumbags. Years ago I was buying a car. Agreed price X. I come to sign documents. Oh, no, the price is something like 1.1X. No, we cannot do X. Unless you sign for financing at 19.99% APR.  ::) OK, I signed up for financing. Paid off X on the very first day of financing, zero interest costs. Just f*cking stress and paperwork. F*ck these dirtbags.

 

#StoriesOf"Evil"PeopleWhoDon'tHonorContracts  ::)

[wabuffo]

Oh, no, the price is something like 1.1X. No, we cannot do X. Unless you sign for financing at 19.99% APR. 

 

Car dealerships make almost no profit on new car sales (though much of their showroom inventory is financed by the OEM).  They make all their profit on financing and after-sale service.  A cash buyer like you removes one of their two profit streams on that new car sale.

 

wabuffo

 

 

[wabuffo]

What's your point?

 

Don't have one, really - yeah.  I just wonder what the sudden spike across the board on used vehicle prices means for depreciation schedules and residual values.  Also what it might be doing to trade-in economics on new car sales.

 

Sorry for the interruption....

 

wabuffo

[cwericb]

Unfortunately, sometimes people encounter a disastrous financial situation that makes it impossible for them to live up to their obligations.

 

However, anyone who would intentionally default on a loan given in good faith, simply because it is to their advantage to do so, is a disreputable, untrustworthy, dishonest, despicable individual.

 

No honest person would disagree.

 

That's ridiculous!  People default on all sorts of loans and due to various circumstances.  I'm not going to judge what an individual chooses to do and is within the law.  Credit reports are there for people to know what type of borrower they are dealing with, and contracts are there for buyers to understand what their obligations are and what recourse there could be against them if they default.  If two parties understand their risks, work within the law, they have remedies available to them.  I shake my head when consumers do stupid things, but at the same time, the system and laws are in place, as long as they are acting within that system...no one can light a candle saying morality is dead!  Individuals, corporations, organizations, institutions all take advantage of the loopholes!  Close the damn loopholes!  Cheers!

 

Why ridiculous?  I’m not sure what you are getting at.

I said that there are unfortunate circumstances that can legitimately prevent some people from repaying their loans. In general there are various legal ways that those debts can be resolved, reduced or wiped out

 

But, if someone simply skips out on his loan or just refuses to pay, that is a different matter.

 

Let me give you a couple of scenarios:

A) Lady buys a new Benz for $100K. No money down, eight years financing, no payments for the first two months. She & her friends drive all over the place for a year or so and then thinks she can just return it and walk away? The car likely depreciated $20K when she drove it off the lot plus there are commissions and huge overhead.

 

B) You sell building materials. Contractor drives up in his nice new $80K truck charges $3,500 to his account for materials to build a customer’s deck. A month later he says he is not going to pay you for the materials because his customer refused to pay him because of poor work quality. Does he still owe you $3500?

 

C) Guy buys an engagement ring for $5K. Two months later guy’s made $150 in payments. He and the girlfriend split up, should he get his $4850 back?

"I'm not going to judge what an individual chooses to do and is within the law."

 

Defaulting on a loan agreement is NOT within the law.

[Spekulatius]

What's your point?

 

Don't have one, really - yeah.  I just wonder what the sudden spike across the board on used vehicle prices means for depreciation schedules and residual values.  Also what it might be doing to trade-in economics on new car sales.

 

Sorry for the interruption....

 

wabuffo

 

The spike in used car values  is caused by shortage - a combination of lower production for a few month and higher demand caused by stimulus most likely. It will be revert in time unless you believe we are going to have a vehicle shortage in the US.  I consider this unlikely.

[bizaro86]

Some years ago a relative of mine was lured into one of the MLM schemes (might have been Herbalife, I don't remember) and signed some commitment to buy their crap for X months. They realized the f*ckuppery when they got the first delivery. They took the package to one of their "seminars", left it there, and told them they won't pay for anything they send. IIRC they did not get any more deliveries and were not forced to pay for their commitment.

 

Also, since we are talking about car dealership scumbags. Years ago I was buying a car. Agreed price X. I come to sign documents. Oh, no, the price is something like 1.1X. No, we cannot do X. Unless you sign for financing at 19.99% APR.  ::) OK, I signed up for financing. Paid off X on the very first day of financing, zero interest costs. Just f*cking stress and paperwork. F*ck these dirtbags.

 

#StoriesOf"Evil"PeopleWhoDon'tHonorContracts  ::)

 

That happened to me once. I stood up, said "sorry, that wasn't our deal" and walked out. I didn't have the door open before the finance guy called me back and signed the original deal.

[Cigarbutt]

What's your point?

Don't have one, really - yeah.  I just wonder what the sudden spike across the board on used vehicle prices means for depreciation schedules and residual values.  Also what it might be doing to trade-in economics on new car sales.

Sorry for the interruption....

wabuffo

This is interesting really and may end up in a specific thread some day.

The used car price index trend has undoubtedly helped with the growing negative equity trend but the trade-in value is based on wholesale prices and most people have simply been able to roll the negative equity into a new loan, helping to understand growing trends maybe.

As far as the economics of repossessed cars, the finance entities have become incredibly efficient at car repossession (vehicle controlled at a distance and localized) and at car selling at auctions. Finance companies (subprime finance companies have to do this often and it's called deficiency management) have this priced in but there are costs (to get the car, to 'fix' it and to sell it; and then to have the legal apparatus (potentially outsourced) to efficiently go after the residual claim). Repossessed cars tend to sell lower than wholesale prices.

Companies like Credit Acceptance are dependent on state policy to some extent but are 'experts' at this.

https://detroitlawyers.com/credit-acceptance/

 

[Parsad]

Defaulting on a loan agreement is NOT within the law.

 

Of course it is within the law.  That's why the law allows recourse for lenders and protections for borrowers.  Cheers!

[Cigarbutt]

Defaulting on a loan agreement is NOT within the law.

Of course it is within the law.  That's why the law allows recourse for lenders and protections for borrowers.  Cheers!

The aim here is not to focus on a specific case (somebody's relative) but i would respectfully submit that you are playing with words here.

The person who walks away from a debt contract is, in essence, breaking the law. Specifically, the person is breaking the contract which has provisions to efficiently deal with the default. If the person considers that he or she is legally right (according to established rules) to consider the contract void for some reason, a case has to be made. Good luck with that in this specific case.

Whether you consider this a moral or an economic failure is a personal opinion but there are rules and rules, until proven otherwise, cannot be broken.

However, the issue raises questions about the rules. Debt is a social construction, has become widespread and private debt has become criminalized to a high degree with potential for exploitation. Law moves very slowly and changes may take longer to achieve than the maturity of the car loan. And having an opinion, in itself, does not break the law.

[cwericb]

Defaulting on a loan agreement is NOT within the law.

 

Of course it is within the law.  That's why the law allows recourse for lenders and protections for borrowers.  Cheers!

 

What I am saying that defaulting on a loan agreement is breaking the law.

If you enter into a lawful agreement, a signed commitment to repay a loan and then you break that commitment, then you are breaking the law.

 

As Cigarbutt put it: "The person who walks away from a debt contract is, in essence, breaking the law."

 

There isn't really any ambiguity about it. If you break a lawful agreement, you are breaking the law.

 

Try it and see what happens.

 

Many years ago during my university years, I worked as Deputy Sheriff in our county.

Had a guy who ran up a number of debts with local merchants and then he attempted to skip the province.

There is a process called a "Bailable Writ" that can be issued if a debtor is suspected of leaving the jurisdiction to escape debt.

In this case the Bailable Writ was issued.

I served that Writ, arrested the guy, and promptly dropped him off at our local crowbar hotel where he resided until his pending court appearance.

 

Aside from the morals of not paying your bills there are definitely legal ramifications.

 

 

[cwericb]

Defaulting on a loan agreement is NOT within the law.

 

Of course it is within the law.  That's why the law allows recourse for lenders and protections for borrowers.  Cheers!

 

In re-reading this I see what Cigarbutt is saying suggesting we are talking at cross purposes.

Perhaps rather than saying "Defaulting on a loan agreement is NOT within the law" I should have said that

"Defaulting on a loan agreement is against the law".

[SharperDingaan]

Very amusing thread!

 

You lend the money, you agree to take the credit risk. Sometimes it isn't going to work out, and you provision against it. Simple.

Trying to blame someone else for your own stupidity, is just not productive.

 

Questionable morals, is part of life. Deal with it.

A great many little old ladies 'forget' to mention to their pension plan provider that Grandpa has croaked. A great many families also 'forget' to mention that Grandma has croaked. Consequently, all else equal, an unreduced monthly pension will pay out for many years beyond Grandmas death. It's fraud, but are you really going to prosecute a corpse? or someone in a nursing home?  Take precautions, provision against it, and move on.

 

Most people (80%?) will honour their commitments, without incident.

However, for some (20%?), it is just human nature to game (legal profession?) - and they raise the costs for everyone. A good credit manager will have associates in low places, visiting the incalcitrant at 120 daYs past due. Collect the outstanding, keep 15%, and get rid of the customer - no questions asked. Gaming goes both ways  ;D.

 

Bottom line is play nice, and you will enjoy a nice life.

 

SD

 

 

 

 

 

 

 

 

[SharperDingaan]

Some years ago a relative of mine was lured into one of the MLM schemes (might have been Herbalife, I don't remember) and signed some commitment to buy their crap for X months. They realized the f*ckuppery when they got the first delivery. They took the package to one of their "seminars", left it there, and told them they won't pay for anything they send. IIRC they did not get any more deliveries and were not forced to pay for their commitment.

 

Also, since we are talking about car dealership scumbags. Years ago I was buying a car. Agreed price X. I come to sign documents. Oh, no, the price is something like 1.1X. No, we cannot do X. Unless you sign for financing at 19.99% APR.  ::) OK, I signed up for financing. Paid off X on the very first day of financing, zero interest costs. Just f*cking stress and paperwork. F*ck these dirtbags.

 

#StoriesOf"Evil"PeopleWhoDon'tHonorContracts  ::)

 

That happened to me once. I stood up, said "sorry, that wasn't our deal" and walked out. I didn't have the door open before the finance guy called me back and signed the original deal.

 

Had a similar incident with a very 'oily' sales person pushing a low price + abusive financing. Took the car, and paid off the financing in full the next day. Following a threatening phone call, a friend paid a visit, after which there were no more incidents. It would seem the financer didn't pay the commission  ;)

 

SD

.

[Parsad]

Defaulting on a loan agreement is NOT within the law.

Of course it is within the law.  That's why the law allows recourse for lenders and protections for borrowers.  Cheers!

The aim here is not to focus on a specific case (somebody's relative) but i would respectfully submit that you are playing with words here.

The person who walks away from a debt contract is, in essence, breaking the law. Specifically, the person is breaking the contract which has provisions to efficiently deal with the default. If the person considers that he or she is legally right (according to established rules) to consider the contract void for some reason, a case has to be made. Good luck with that in this specific case.

Whether you consider this a moral or an economic failure is a personal opinion but there are rules and rules, until proven otherwise, cannot be broken.

However, the issue raises questions about the rules. Debt is a social construction, has become widespread and private debt has become criminalized to a high degree with potential for exploitation. Law moves very slowly and changes may take longer to achieve than the maturity of the car loan. And having an opinion, in itself, does not break the law.

 

Defaulting on a loan agreement is NOT within the law.

 

Of course it is within the law.  That's why the law allows recourse for lenders and protections for borrowers.  Cheers!

 

What I am saying that defaulting on a loan agreement is breaking the law.

If you enter into a lawful agreement, a signed commitment to repay a loan and then you break that commitment, then you are breaking the law.

 

As Cigarbutt put it: "The person who walks away from a debt contract is, in essence, breaking the law."

 

There isn't really any ambiguity about it. If you break a lawful agreement, you are breaking the law.

 

Try it and see what happens.

 

Many years ago during my university years, I worked as Deputy Sheriff in our county.

Had a guy who ran up a number of debts with local merchants and then he attempted to skip the province.

There is a process called a "Bailable Writ" that can be issued if a debtor is suspected of leaving the jurisdiction to escape debt.

In this case the Bailable Writ was issued.

I served that Writ, arrested the guy, and promptly dropped him off at our local crowbar hotel where he resided until his pending court appearance.

 

Aside from the morals of not paying your bills there are definitely legal ramifications.

 

 

 

I fully agree with you both...but it is a civil case, not criminal.  The law has protections for borrowers as much as the law protects the contract on behalf of the lender.  Morality is in a constant state of flux...it's ok for Trump to default as a SITTING President, but some old granny defaults and she is not living up to moral obligations. 

 

I'm on the side of enforcing contracts, but I also know people get themselves into unfair contracts as well...call it being naive, stupid or whatever else, but individuals make mistakes.  In an ideal world, I would expect people to live up to all contracts...legal, verbal, etc.  But we don't live in an ideal world.  Shit happens, people live in cardboard boxes, babies die!  Cheers!

[Parsad]

Very amusing thread!

 

You lend the money, you agree to take the credit risk. Sometimes it isn't going to work out, and you provision against it. Simple.

Trying to blame someone else for your own stupidity, is just not productive.

 

Questionable morals, is part of life. Deal with it.

A great many little old ladies 'forget' to mention to their pension plan provider that Grandpa has croaked. A great many families also 'forget' to mention that Grandma has croaked. Consequently, all else equal, an unreduced monthly pension will pay out for many years beyond Grandmas death. It's fraud, but are you really going to prosecute a corpse? or someone in a nursing home?  Take precautions, provision against it, and move on.

 

Most people (80%?) will honour their commitments, without incident.

However, for some (20%?), it is just human nature to game (legal profession?) - and they raise the costs for everyone. A good credit manager will have associates in low places, visiting the incalcitrant at 120 daYs past due. Collect the outstanding, keep 15%, and get rid of the customer - no questions asked. Gaming goes both ways  ;D.

 

Bottom line is play nice, and you will enjoy a nice life.

 

SD

 

 

 

 

 

 

 

 

 

You got it Sharper! 

 

The irony of all of this is, what if this granny makes all of her obligations on the car, but the dealer goes under and doesn't back it's obligations, service contracts, warranties, etc.  No one is going to go after them on her behalf...just another corporate bankruptcy!  Cheers!

[LongHaul]

A relative took out a loan to buy a flashy European car a year ago. After convincing her to sell the car to prepare for retirement, we realized that the loan is underwater (~$9k gap to sell and pay off). The destruction of the value of luxury cars is unbelievable (and enhance my hatred toward new car salesman)

 

Then I thought- what if she just stop paying and surrender the car? Quick research online suggests that it may not be a good idea- impact on credit and potential lawsuits to garner wages. Then again, she doesn't need credit or earn wages- she's retired (in her 70s), house paid for, can sunset comfortably if she manages her nest egg well. What are the potential blowbacks for her?

 

I remember back in '09/'10, people were walking away from their mortgages. If banks/ PEs can lever up and walk away unscathed from a blowup, it'd be great if she can too. I know it's recourse vs non-recourse, but still...

 

What can you sell but not buy?  Your Character.

 

I think it a matter of personal honor that a person pays back what they promise to pay back.  If she does not pay it back, and especially if she can afford it, then it is very dishonorable to default on the debt she promised to pay back.    It is irrelevant who else defaults and when. 

 

It was 100% her personal choice to buy that specific car and her choice to deal with a certain dealer. 

 

And if one really looks through who she is defaulting to - there are probably some widows who own the debt in their portfolios and 401ks etc.  There are other human beings on the other side of transactions - not just legal constructs called corporations.  Ultimately it is people not paying back other people money they promised to pay back.

 

I applaud people like DooDiligence who take the honorable course (especially when it is tough) and the businesses who are run conservatively and don't default on their obligations even when they can.  And for personal interest - I think people who can own up to their mistakes of personal choices and not blame others for everything do much, much better than others the long run.  Those are the types that Buffett and Munger and quality individuals want to be associated with. 

 

   

 

 

 

 

 

 

 

 

[Parsad]

A relative took out a loan to buy a flashy European car a year ago. After convincing her to sell the car to prepare for retirement, we realized that the loan is underwater (~$9k gap to sell and pay off). The destruction of the value of luxury cars is unbelievable (and enhance my hatred toward new car salesman)

 

Then I thought- what if she just stop paying and surrender the car? Quick research online suggests that it may not be a good idea- impact on credit and potential lawsuits to garner wages. Then again, she doesn't need credit or earn wages- she's retired (in her 70s), house paid for, can sunset comfortably if she manages her nest egg well. What are the potential blowbacks for her?

 

I remember back in '09/'10, people were walking away from their mortgages. If banks/ PEs can lever up and walk away unscathed from a blowup, it'd be great if she can too. I know it's recourse vs non-recourse, but still...

 

What can you sell but not buy?  Your Character.

 

I think it a matter of personal honor that a person pays back what they promise to pay back.  If she does not pay it back, and especially if she can afford it, then it is very dishonorable to default on the debt she promised to pay back.    It is irrelevant who else defaults and when. 

 

It was 100% her personal choice to buy that specific car and her choice to deal with a certain dealer. 

 

And if one really looks through who she is defaulting to - there are probably some widows who own the debt in their portfolios and 401ks etc.  There are other human beings on the other side of transactions - not just legal constructs called corporations.  Ultimately it is people not paying back other people money they promised to pay back.

 

I applaud people like DooDiligence who take the honorable course (especially when it is tough) and the businesses who are run conservatively and don't default on their obligations even when they can.  And for personal interest - I think people who can own up to their mistakes of personal choices and not blame others for everything do much, much better than others the long run.  Those are the types that Buffett and Munger and quality individuals want to be associated with. 

 

 

 

I fully agree with that, but didn't Buffett's own sister file for bankruptcy at one point?  The laws are there for a reason.  As long as individuals are acting within the law, and fulfilling any judgements meted out against them through the courts, they are still acting within the law.  Cheers!

[Spekulatius]

 

What can you sell but not buy?  Your Character.

 

 

Turk but we also have a saying in German:

 

“Ist der Ruf erst ruiniert, lebt es sich recht ungeniert”

 

I am sure google translate will come up with an about correct translation. At some point, you have to make a pick between the two lifestyles and stick with one.

 

I am sure SD has more wisdom to spread on this matter than I do  8).

[Jurgis]

Since this thread is active again...

 

Another anecdote.

 

A friend had to call ambulance for health emergency. They had big 3 insurance, so what can go wrong, right? Well, they get $2100 bill for ambulance service... Insurance paid the ambulance company their rate of $700. Ambulance company though claims it's not in network and not accepting insurer's rates, and their total is $2800 (for 10 minute drive KK OK!), so please pay $2100 from your pocket. This an intentional scam where ambulance organizations intentionally do not go "in network" with the insurers so that they can milk the unwary. But hey, the victim should just roll over, show the great moral character and pay up to the extortionists, right? They entered the contract knowingly ... they called 911... nobody forced them... ::) (The insurer is trying to work this out with the extortionist ambulance company, but results are not guaranteed).

 

There was a similar story in the news where a Covid patient had to be airlifted and is stuck with $57000 bill since airlift company does not accept insurer's rate either. Sounds like a pattern?

 

Oh, the great moral US medical system. It builds character in all of us.