Identity Theft Recovery: A Step-by-Step Action Plan

Discovering that someone has used your personal information to open accounts, file taxes or make purchases can feel overwhelming. The good news is that federal law gives victims real tools, and a clear sequence of steps can limit the damage and restore your records. This identity theft recovery guide walks you through what to do first, how to clean up your credit, and how to protect yourself going forward.

Signs Your Identity May Have Been Stolen

Warning signs include:

• Bills, collection calls or statements for accounts you did not open.
• Unfamiliar accounts or inquiries on your credit reports.
• Missing mail or a notice that your address was changed.
• An IRS notice that more than one return was filed with your Social Security number.
• Denials of credit you expected to get, or medical bills for care you never received.

Step 1: Contact the Companies Involved

Call the fraud department of each business where fraud occurred, such as a bank, card issuer or retailer. Explain that you are an identity theft victim, ask them to close or freeze the accounts, and change your passwords and PINs. Follow up in writing and keep copies.

Step 2: Report to the FTC

Go to IdentityTheft.gov, the Federal Trade Commission's official site, to report the theft. The site creates an Identity Theft Report and a personalized recovery plan with prefilled letters. An Identity Theft Report gives you important rights, including the ability to block fraudulent information from your credit reports.

You may also file a report with your local police department, especially if you know the thief, if a creditor requests it, or if you need it for an insurance claim.

Step 3: Place a Fraud Alert or Credit Freeze

Fraud Alert

A fraud alert tells lenders to take extra steps to verify your identity before opening credit. An initial fraud alert lasts one year and is free. Contact any one of the three nationwide credit bureaus, Equifax, Experian or TransUnion, and that bureau must notify the other two. Identity theft victims with an Identity Theft Report can request an extended fraud alert lasting seven years.

Credit Freeze

A credit freeze restricts access to your credit report so new creditors generally cannot check it, which makes it much harder for someone to open accounts in your name. Under federal law, placing and lifting a freeze is free. You must contact each of the three bureaus separately. You can temporarily lift the freeze when you apply for credit, such as when you start the mortgage application process.

Step 4: Review Your Credit Reports

Get free copies of your reports from each bureau at AnnualCreditReport.com, the only federally authorized source. Free weekly reports are available there. Look for accounts, addresses, inquiries and employers you do not recognize.

Step 5: Dispute and Block Fraudulent Information

Under the Fair Credit Reporting Act, you can dispute inaccurate information with the credit bureaus and with the company that reported it. If you provide an Identity Theft Report and proof of identity, the bureaus generally must block fraudulent information that resulted from identity theft. Send disputes in writing, include copies of supporting documents, and keep records of what you sent and when.

You also have the right to ask businesses for copies of documents related to fraudulent transactions, such as applications made in your name. These records can help you prove fraud.

Step 6: Handle Debt Collectors

If a debt collector contacts you about a debt you did not incur, tell the collector in writing that you are an identity theft victim and that the debt is not yours. Include a copy of your Identity Theft Report. Under the Fair Debt Collection Practices Act, you can dispute the debt and request validation. Collectors are generally prohibited from selling or transferring a debt after being notified it resulted from identity theft.

Step 7: Protect Your Tax Records

If someone filed a tax return using your Social Security number, respond promptly to any IRS letter. If your e-filed return is rejected because a return was already filed, the IRS may ask you to submit Form 14039, the Identity Theft Affidavit. You can also request an Identity Protection PIN from the IRS. This six-digit number, which changes every year, helps prevent anyone else from filing a return with your Social Security number. The IP PIN program is open to any taxpayer who can verify their identity.

Tax identity theft can also delay your refund and complicate your filing. If you are filing as a single parent, our guide to head of household filing status explains documentation that can help support your return.

Step 8: Check Other Records

• Medical identity theft: review explanations of benefits for services you did not receive and request copies of your medical records.
• Social Security: create a my Social Security account to review your earnings record.
• Bank account screening: request your report from a consumer reporting company that tracks checking accounts.
• Driver's license: contact your state motor vehicle agency if your license number was misused.

Preventing Future Identity Theft

• Keep your credit frozen unless you are actively applying for credit.
• Use strong, unique passwords and turn on multi-factor authentication.
• Shred documents containing personal information.
• Be skeptical of unsolicited calls, texts and emails asking for information.
• Monitor your accounts regularly and set up transaction alerts.

The Bottom Line

Identity theft recovery follows a clear path: contact the companies involved, report to IdentityTheft.gov, place a fraud alert or freeze, review your credit reports and dispute fraudulent items, and protect your tax records with an IP PIN. Keep copies of everything and follow up until each account is resolved.