How To Combat Debt Incurred Through Identity Theft?

Identity theft has always been deceptive, tough to spot and hinders the spread of technology.

Whenever you store more information online, the chances of identity theft increase as criminals get wider access to steal your private information. According to the Federal Trade Commission (FTC), each year nine million American’ identities are stolen, which results in $631 off out-of-pocket expenses for the victim.

Often, it takes years to realize that you are a victim of identity fraud and similar time to recover your credit worthiness. And often, victims of identity fraud/identity theft have debts that aren’t theirs, but they don’t know how to prove it.

As a result, victims use debt consolidation or bankruptcy to get out of the situation without knowing what they are (and/or are not) liable for any fraudulent debt resulting from identity theft.

Preventing and Detecting Identity Theft

Before you know how to get rid of your fraudulent debt without paying the same, you should know how to prevent identity theft first:

  • Always tear up your financial documents.
  • Sign the reverse of your credit cards immediately (or better yet, write SEE ID in the signature field and on the front of the card in magic marker), so that an aware clerk will at least think to check your ID.  This doesn’t always work, but sometimes helps.
  • Leave your social security number and card at home in a safe place.
  • Keep your personal information personal by only sharing it on an as-needed basis (may not help as there are many examples where trusted people are selling information).
  • Be careful of links in unsolicited emails.  There are multitudes of anti-fraud and anti-phishing toolbars and software.  Pick one and run it on your computer.  We like Spybot and AVG.
  • Use lengthy passwords that are hard to figure out. Substituting O for @ or s for $ is a good trick in a password.
  • Always report theft or loss of any identification material (passport, license, etc).  The value of this is that at least you have a police report to show that your information was lost/stolen.
  • Always scrutinize your bank or credit card statements carefully.

Obtain and review the free copy of you annual credit report. To order a free copy of your annual credit report, go to or call toll-free to 877-322-8228. Otherwise, you can also contact other credit report vendors (like Equifax, Experian, or TransUnion).

Stopping Identity Theft and Fraudulent Debt

Once you realize that you have fallen victim to identity fraud, immediately file a “Fraud Alert” on your credit report and review your reports carefully. This will further help your creditors to take advanced security measures. If you file a fraud alert, you will also get a free copy of your credit report.

Once you have filed a fraud alert, you should do the following:

  • Request the consumer reporting companies to block fraudulent information.
  • Contact the security and fraud departments of the companies where an account was created without your awareness.
  • Send the companies copies of supporting documents, including the affidavit of identity theft.
  • Ask if the account has been resolved and fraudulent debts discharged.
  • Complaint in detail to the police.
  • Report the fraud to the FTC.

Fortunately, the FTC has a very useful “tools for victims” site, which provides directions, sample letters, and further a chart that you can print and fill out to know what you’ve done and what steps are still left.

IdentityTheftSecrets note:
This is a guest post, and as such is filled with a lot of re-hashed information we have covered on this site for the last 6 years.  However, a reminder is always a good thing.