Legal Question in Credit and Debt Law in California

Yes you can get a judgment on the note (depending on what the note says) and garnish his wages and lien his property. If he files bankruptcy, you may be out of luck for collection of this debt.

Joel

You are at his mercy. Just hope he either does not file bankruptcy or does file and voluntarily pays you after. A judgment will only increase the chance he will file and decrease the chance he will pay you. If he files he must include all debts. However, he can pay any debt after bankruptcy voluntarily. Just be nice to him. Suing him will almost guarantee losing both the money and the friend, which is unfortunately what often happens when you lend money to a friend.

I am not a bankruptcy specialist and you should consult with one before relying on this, but I believe he is offering to do you a favor. I am fairly certain that if he does not schedule you as a creditor, you will be exempt from the bankruptcy discharge, meaning the obligation will survive. If you sue him, that may force a bankruptcy and you would be included in order to bring you under the automatic stay of proceedings. Likewise, if you get a judgment, it is almost certain you would be scheduled and forced to take whatever you get, if anything, with the balance discharged. On the other hand, if you are scheduled as a general creditor, rather than a judgment creditor, you may be last in line for any payment. You really need to consult a creditor's bankruptcy attorney for more definite answers.