Ask for your debt to be reduced or at least for an option to pay in monthly rates (without interest, if possible). Often, collection agencies will accept such proposal. They want their money as soon as possible and always try to avoid the hassle of going to court.
Whatever agreement you reach, makes sure it is in writing. And carefully examine it before accepting.
Depending on the laws of the country you live in, debts can get outdated and no longer valid. In such case, you are no longer responsible to repay this debt. So before acknowledging any debt, make sure it is still valid.
Every time you send something to a collection agency, make sure you use a certified mail. That way, the collection agency will not be able to claim it didn't receive a certain document you sent to them.
If your customers owe you a significant amount of money, and that's one of the main reason you're in debt, explain your situation to them and make them understand your business won't survive unless they pay what they owe you. Give them a discount if needed or an option to pay you in monthly installments. Anything that will get you some money.
The worst thing to do when you owe your suppliers or creditors is to hide from them and reject any kind of contact. It's hard to deal with upset creditors and suppliers, but it's something that has to be done. Explain your situation and try to reassure them. Reach some kind of a deal that will make your debt manageable.
If you hide from them, creditors might panic or get angry at you and sue you or sell your debt to a third party. Suppliers might cut you off, shutting down your production and making it impossible for you to get back on your feet. So no matter what, never stop communicating with people you owe to.
Chapter 7 is suitable for individual or businesses who have no other way to repay their debts except to liquidate their nonexempt property and proceed earnings to their creditors. Certain requirements have to be met for you to file for chapter 7. For more about chapter 7 and to see if you are eligible for it, visit uscourts.gov
Chapter 13 offers you a repayment plan that usually lasts from 3 to 5 years. It's suitable for individuals or small business owners who have steady incomes and are able to repay at least portion of the debt. For more information, visit uscourts.gov.