Before you do anything, ask yourself how much longer you intend to own the car and if it's worth it to you to spend more than the value of the car to fix the rust. If the wheel arches are this bad there is going to be more rust that you don't see (yet) in other places.
To fix this correctly you're looking at having a body shop cut and weld in patch panels and then bodywork and paint work to blend everything back in. You'll easily spend a more than the value of the car to have all the visibly rusty spots fixed, and then a short time later you'll find more rust bubbling through at the rear, or along the door sills, at the bottom of the doors, etc.. Rusty cars don't become un-rusty without a big investment. Are you emotionally attached to this car for some reason and plan to keep it forever? This would be the only reason to spend this level of money restoring it vs. selling it and buying one that is rust free. It doesn't make financial sense to fix the rust as these cars just aren't worth enough.
Alternatively, you can grind back the rust as much as possible and slap on some bondo and paint, but that will only hold up for so long before the rust comes back. If you are looking for a stop-gap good enough for now type solution, this might be acceptable to make the car look 80% better until something big fails mechanically and the car is ready to go to the salvage yard.
Or you can just make peace with the fact that you have a rusty car, and leave it alone. My sedan has rust starting in half a dozen places and in a few years will probably look worse than yours. I'm cool with that though as it's just a daily driver and my winter beater. I'll keep fixing it mechanically to keep it reliable, but the day something major goes wrong it's done.