This article considers a third option, which is to refinance in order to consolidate short-term debts.
Homeowners with one mortgage and high-cost short-term debt can refinance that mortgage with cash-out in an amount sufficient to pay off the short-term debt.
* They can refinance the second mortgage with cash-out to consolidate the short-term debt, leaving the first mortgage alone.
You can be considered liquid if you have at least the same amount of short-term assets that will or can be converted to cash to pay your short-term debts. And when I say short-term, that means within one year from now.
Now it is not uncommon to see people who also fail to have sufficient long-term assets to settle their short-term debts. In this kind of scenario and assuming there is no other recourse like balance transfer or getting a loan from a relative or friend, then the borrower will need to just persist in requesting his creditors for a restructuring while paying whatever amounts he can periodically.
Long-term debts are 115.5 billion dollars, accounting for 75.1 % of the total, and short-term debts are 38.3 billion dollars or 24.9% of the total.
The proportion of short-term debts to the total fell 1.2 points from the previous month, the ministry said.
This was enough to cover nearly a year worth of imports and was 6.6 times the total outstanding and short-term debts of private and government entities in the Philippines.
According to international benchmarks, a GIR is comfortable if it is worth three to four months of a country's import requirements, and if it is equal to its outstanding short-term debts to foreign creditors.
Short-term debt comprises 28 per cent of the total debt of unrated companies, Moody's said.
"The greatest need to extend short-term debt maturities is among companies in the telecommunications industry, real-estate sector and related industries such as construction, as well as investment holding companies," the report said.