Legal Question in Bankruptcy in California

You can take your chances that he won't file bankruptcy if only because of your claim against the defendant. If you settle and he files for bankruptcy anyway, you will be required to return the money to the bankruptcy trustee if it occurs within a short period. If a Chapter 7 bankruptcy goes through to completion, the debt probably would get discharged (wiped out), unless it had been incurred by fraud or intentional injury, among other things.

I've known many defendants who say they're broke and they're going to file for bankruptcy, and never do. Of course, finding assets from which to collect once you receive a judgment might be difficult. But it might make sense to just get your judgment and start the collection process. Good luck!

Go on with the suit and try to settle at the same time but don't stop the process until you are in possession of cash. Anyone actually filing bankruptcy would not be interested in settlement normally. Cash is always good. Even if you get a judgment getting the money will probably not be easy even if the defendant does not file a bankruptcy case.