Poorly. I handle it poorly.
Every time it happens I end up feeling like an idiot, being percieved as awkward and verbally clumsy, and I feel guilty about having ruined the conversation. I haven't found a good way to cope with it yet ... but it's one of the reasons why I prefer things like SMS, email and chat for communication rather than talking to others directly. I can delete and rewrite text as often as I want to until it reads okay, but I can not rehearse an entire conversation beforehand and then just rewind whenever I said something that "doesn't fit", so I have to deal with the consequences. Smalltalk with coworkers is the worst.