Unfortunately, when a company cannot pay its debt, the consequences can be severe. In fact, when it comes to bank debt, liquidation may be the only alternative.

However, with the recession, creditors realize that it may make more sense to work things out, especially since there are signs that the economy is making a comeback.

So, if you're behind on your debt payments, there certainly steps you can take to work things out. Have a look:

Lenders are feeling the heat to modify loans, but as the numbers mount loan servicers are finding they are helping more people but falling behind on the percentages. For example, Larry Litton of Litton Loan Servicing told USA Today that historically his company has been able to help 60% of homeowners avoid foreclosure, but today because of tougher lending standards, falling home prices and poorly underwritten loans, he only can modify about 45% of the bad loans on his books.

Countrywide (NYSE: CFC) does feel the pressure, and is the first major lender to announce that it will refinance or modify $16 billion in subprime ARMs that will reset through next year. Now if other lenders and investors would jump on that bandwagon maybe we really would have a solution and prevent a further deterioration in the housing markets. Countrywide will contact borrowers who are current on their loans but facing a rate reset to discuss options. It expects to refinance about $10 billion in loans and modify another $4 billion.

Countrywide's solution answers what the FDIC wants. Sheila Bair, chair of the FDIC, told USA Today that she wants lenders to covert people to fixed rates now who are paying on time before the ARM resets. That's 80% of people currently in ARMs that will be reset in the next year.