Your lifestyle is a comfortable one and you have no concerns about overdue bills as they are always paid before time. The investment property with water views has just been purchased and then you are dealt a shocking blow. The latest credit card statement comes in the mail and it claims that you have made thousands of dollars worth of purchases. The trouble is that you don't remember making them. You check with your wife and she confirms the worst - she hasn't purchased a new HDTV as a surprise for you! You have become a victim of an identity thief - they are the ones who have spent your credit.

Consumers discover the identity theft in approximately 50% of the cases and in around 40% of cases of identity theft, the criminal was known to the victim. It could have been a friend or relative, someone you work with, a neighbor, someone who works for you, a restaurant worker or an employee of your bank. Sometimes identity thieves obtain your information from a stolen wallet - in approximately a third of cases; and still more may obtain this information from rubbish or stolen mail. Whatever way it has happened, it is now up to you to fix the mess.

The first thing to remember is not to panic. It is natural for you to react as you would to a violent crime: you will feel violated and the adrenalin will be pumping. Rest assured, though, you will not be required to pay for these unlawful transactions.

Your first action should be to call the financial institution involved. This should ideally be performed within 30 days to ensure that you are protected legally. You should inform them that you believe these transactions to be those made by an identity thief and that you wish for the charges to be removed from your statement. It may also be a good idea to close that account and open a new one to prevent the thief from making further charges.

Make sure that you are organized and that you keep a thorough record of all phone calls made in connection with the fraud: this includes recording the names of the people with whom you spoke and a summary of what was said. Written correspondence should be carefully filed, both copies of what you have sent and what you receive. Send all correspondence by certified mail to ensure it reaches its destination. If you can do this it will boost your case.

You may wish to request a password from your financial institution to prevent the next identity thief from changing your billing address. Even if you are dealing with electronic transactions such as Chase bank online features, make sure that, whenever it is possible, you speak with the fraud investigation department of the institution rather than general staff as the fraud department will need to hear the story from you.

If any checks or papers have been used by the thief you should report this as a crime to the police, being sure to obtain a copy any of their report and send it on to both the bank and the merchant who cashed the check.

Once all this has been finalized, you should continue to make regular checks on all your financial accounts. Make sure that you are scrupulous in this, checking for any "odd" or fraudulent charges. Ask for copies of your credit reports from the credit bureaus and ensure that there is no negative information contained within them. You are within your rights to request that any incorrect information is removed - obviously, you do not want to have the actions of a criminal impacting upon your credit rating!

It is unavoidable that correcting these problems will take some time, the average amount of time being 40 hours, sometimes spread over months. Your accounts, however, will eventually come back to normal.