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If their is a deficiency in the sale, the bank may decide to sue you to get a judgment. They will first look at the legal fees involved in getting the judgment and then look at the likelihood of collecting back at least their legal fees before they decide to come after you in CA. The larger the size of the deficiency balance and the better the chances of collecting, the more likely they are to come after your assets in CA.
However, they will first have to file suit and then they will have to obtain a judgment and then they will have to domesticate the judgment in CA. Even if they do all of that, they can only attach the judgment to your "non-exempt" assets. See the link below to understand what is exempt from attachment.
Converting your sole propreitorship to a INC or LLC will not necessarily help since you would still own the stock or the interest in the business which could be subject to attachment. At least, as a sole properitorship you still may be able to some of those business assets as exempt.
Also, any transfers or conveyances you make once there is a threat of litigation can be challenged by the creditor as fraudulent and the court can have them reversed. Please click "ACCEPT" so I can get credit for my work. We can continue our conversation after this at no additional charge.
Domesticating the judgment means that they will have to take some legal steps to convert the AL judgment into a valid CA judgment. As to the exemptions, look to the right column on the list and you will see the CA Code citations, those are CA state exemptions and are available outside of BK. But as to the details of how to claim them may vary based on whether they are used in the BK context or outside it.
The process of getting the judgment in AL can take 3 to 6 months and domesticating it can take another month or so.
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