The essential problem is that banks have issued credit against asset based securities that were grossly overvalued. These are debts that we have accumulated over the last 50 years. They will not be repaid, the only question is how we as a society choose not to pay them.
The ideal outcome would drop both the exchange value of these assets, and the credit lent against them. While preserving the equity of the current owners, and imposing a new lower limit on their security value. But while you want to reduce the future income of the lending banks, you don't want them to go broke overnight, since this would also have drastic flow on effects on the economy.
This might be achievable by limiting security value based on the productive output of an asset (instead of the current exchange value). This limit should be the same for everyone, regardless of their ability to pay. That way, if you wish to place the highest bid at an auction, you must put more of your own money on the table. An auction should be won by the person with the deepest pockets, not the person with the highest bank loan. Want to buy a house? Well, you'd better start saving for a deposit.
The introduction of these new limits would have to be staggered. You should be able to calculate the net reduction in debt at a national level. Then to be fair, you could "simply" (cough) hand out the same amount of cash to all individuals. If you have debts, you must pay them down as your credit limit will be going down. If you don't have debts? Spend it, save it, whatever.
Fixing this quickly will be a massive restructuring operation, with a massive impact on the wealth of all individuals and businesses. It is not an action to be taken lightly. Multiple proposals should be submitted, with their outcomes carefully modelled. Of course that assumes that the models used actually reflect reality.
As I expect to see a series of market crashes, followed by longer periods with anaemic growth. On any particular day, things will be looking better. Even when employment falls to Great Depression levels, it will be hard to convince everyone that we need to try something drastic.