So I've run into this predicament. I over-loaded myself with work and not enough time. Then, I became ill a couple of times which set everything back even more. Long story short, I had a communication break down with two clients and feel like I've ruined my reputation; even if not publicly I feel I've let myself down. I've spent more time apologizing for missing work than actually demonstrating new features and staying available.
One of the clients is fine. I explained the situation to them. They decided we could step back and do fewer hours. I never heard from them but I imagine that's simply because of the holiday season. Regardless, it's sort of on their shoulders now whether they want me back.
The other client is whom I'm very worried about. We got pretty deep into his project. It's a very specialized piece of software that he can't/won't handle and he's invested a small sum of money into it. I don't want him to lose out on his investment nor do I want to come crawling back and feeling pitiful. I want to make things better. Especially since I know how hard it is to find people to work on things like this for a reasonable rate and it'd be a pain for someone else to try to step in and pick up where it left off.
As an independent developer, my livelihood depends upon my reputation. Not only that, I actually became slightly depressed, extremely stressed, and even un-motivated because I let myself get so far behind on everything and didn't live up to my own (or their) expectations. Not once did the client treat me bad and he is a very great person to work with.
Do you have any suggestions on how I can fix this situation? I still don't have a lot, if really any, free time. I'd love to just say I could finish the rest of the project for free but I honestly don't think I have the time nor spare brain power to see it to completion. At least not with the depth of customization and agile-development we had taken. Even if I never do another independent development job and can ignore my reputation, I still want to fix this so that client isn't left with the bad end of the deal. I've been beating myself up over this and that's not doing either of us any good.
So, what are my options to try and repair my relationship with these clients?
Edit: I just wanted to include some technical details. I was not paid up front for this project. We decided on a bi-weekly payment. In fact, I'm actually behind on payment. However, I'm not worried about the pay. It's seeing this client's project followed through and not being able to meet his or my expectations that's making it a very stressful situation. I'm just hoping there's someone who's been there before, on either end of the relationship, and can give me some good advise or options I hadn't thought about.