CalAssist After a California Wildfire:

Could Up to $100,000 Save Your Home?

When a wildfire destroys a community, the financial damage often continues long after the flames are extinguished. Families may be displaced for months, lose employment, incur unexpected expenses, and fall behind on their mortgage payments—all while trying to rebuild their lives.

Recognizing these challenges, California created the CalAssist Mortgage Assistance Program, which can provide up to $100,000 in mortgage assistance for eligible homeowners affected by qualifying disasters, including the Eaton Fire.

For many homeowners, this assistance can mean the difference between foreclosure and keeping their home.

What Is CalAssist?

CalAssist is a state-funded disaster recovery program designed to help eligible homeowners who have fallen behind on their first mortgage because of a qualifying natural disaster.

Unlike a traditional loan:

  • Assistance generally does not have to be repaid if program requirements are met.
  • Funds are paid directly to the first mortgage servicer, not to the homeowner.
  • The money may be used to cure eligible mortgage arrears and help homeowners avoid foreclosure.

Because the funds never pass through the homeowner, CalAssist is very different from receiving insurance proceeds or a cash grant.

How Much Assistance Is Available?

Eligible homeowners may qualify for up to $100,000 in mortgage assistance.

The actual amount depends on several factors, including:

  • the amount of eligible mortgage arrears;
  • the program’s eligibility requirements;
  • documentation submitted by the mortgage servicer; and
  • CalAssist’s review and approval process.

Many homeowners are surprised to learn that the mortgage servicer plays an important role in determining the final amount approved.

Can I Receive CalAssist If I’m in Bankruptcy?

Yes.

However, being in an active Chapter 13 bankruptcy can add an additional layer to the process.

Because the Bankruptcy Court has jurisdiction over the debtor’s financial affairs, CalAssist may request documentation confirming that the bankruptcy does not prevent implementation of the assistance.

Depending on the circumstances, the Chapter 13 Trustee may also require court approval before providing the documentation requested by CalAssist.

This does not mean you are ineligible. It simply means that your bankruptcy attorney may need to coordinate with the Trustee, the mortgage servicer, and the Bankruptcy Court to ensure everything is handled properly.

A Recent Success in Bankruptcy Court

Our office recently represented a Chapter 13 debtor whose home was affected by the Eaton Fire.

During the bankruptcy case:

  • the homeowner applied for CalAssist;
  • CalAssist approved substantial mortgage assistance;
  • the Chapter 13 Trustee requested that court authorization be obtained;
  • our office negotiated a stipulation with the Trustee; and
  • the Bankruptcy Court entered an order authorizing implementation of the CalAssist assistance.

The Court specifically authorized:

  • the debtor’s participation in CalAssist;
  • direct payment of the approved funds to the first mortgage servicer;
  • the Trustee’s cooperation with the program; and
  • implementation of the assistance while preserving the rights of all parties.

This was an important result because it allowed the disaster-relief funds to move forward within the Chapter 13 case while protecting everyone’s legal rights.

Why This Matters

Many Chapter 13 cases involving homeowners are filed because mortgage arrears have become impossible to cure through monthly plan payments alone.

A substantial CalAssist award can dramatically change the case.

If the first mortgage arrears are significantly reduced—or even eliminated—the homeowner may have options that previously did not exist.

For example, depending on the remaining balance and the debtor’s income, it may become possible to:

  • keep the home instead of selling it;
  • modify the Chapter 13 plan;
  • resolve pending foreclosure litigation;
  • continue making regular mortgage payments; and
  • successfully complete the bankruptcy case.

Every situation is different, but CalAssist can provide opportunities that simply were not available before.

What Happens After the Funds Are Applied?

Receiving approval is only one step.

After the funds are sent, the mortgage servicer must:

  • post the payment;
  • apply the funds according to the program requirements;
  • determine any remaining mortgage arrears; and
  • issue updated loan information.

This accounting is extremely important because it tells everyone—including the Bankruptcy Court—what, if anything, still needs to be addressed.

Sometimes homeowners assume they can simply subtract the CalAssist payment from the total amount they owe. Unfortunately, mortgage accounting is rarely that simple. The funds may be applied to interest, escrow shortages, advances, fees, or other eligible arrears under the program. Until the servicer completes its accounting, no one can accurately determine the remaining default.

Don’t Assume Bankruptcy Prevents You From Receiving Disaster Assistance

One of the biggest misconceptions we hear is:

“I’m in bankruptcy, so I probably don’t qualify.”

That is often not true.

In many cases, bankruptcy and disaster assistance can work together. The key is making sure the program requirements, the Bankruptcy Code, and any court approvals are handled correctly.

If You’ve Been Affected by the Eaton Fire, Don’t Wait

If your home has been affected by the Eaton Fire or another qualifying California disaster, and you’re behind on your mortgage, there may be options available that weren’t available just a few years ago.

Whether you’re considering bankruptcy, already in Chapter 13, or trying to stop a foreclosure, obtaining qualified legal advice early can make a significant difference.

Our office regularly assists homeowners with Chapter 13 bankruptcy, foreclosure defense, mortgage issues, and disaster-related financial recovery. If you have questions about CalAssist or how it may affect your bankruptcy case, contact the Law Office of Daniela Romero at (626) 296-6971 or www.dromerolaw.com to schedule a consultation. We would be happy to review your situation and help you understand your options.

Need More Information?

At the Law Office of Daniela Romero, we believe in relationships that are based on trust. Before we work together, we would like to get to know you and we would like you to get to know us. We want you to be sure you are the right fit for us and that we are the perfect fit for you. This will allow you to be completely comfortable sharing intimate and difficult details of your case, so we can offer you representation to the fullest extent of the law. Call us today to set up a free consultation.