Frauds in credit counseling
Despite credit counseling having several advantages, it is prone to many forms of fraud. A credit counseling company may request or demand to give the service of the non profit debt consolidation to you explaining that not profits will be gained but end up stealing the difference on interest for all the time you pay for the debt. In records they would show that the costs and the interest in all the consolidated debts are equal to the benefit gain hence no income is gain whereas that could be untrue.
Some fraudulent credit counseling companies insist on the client to remit money to them rather than to the creditor, here two thing may happen; either they first utilize the money for their own gains or deduct some of it as consultation fee and remit a lesser amount than agreed. This could increase or delay your completion of the credit card debt or increase in interests as the creditor may think you have breached their contract. A genuine counseling company will wait to be paid their dues by the creditor or the debtor as per their agreement.
Another fraud occurs when the credit counseling company claims to be licensed and well experience where as it is not. Here the clients are duped and given the worst service for unreasonable price. Again the counseling companies may charge for services that anyone can perform as contacting the creditor to request a meeting or consolidating credit cards. So be careful on the company you settle for; check their accreditations.