First, I'm not admitted in California. But I am familiar with small claims matters in MD, DC and VA. A small claims lawsuit is a creditor's attempt to get a judgment against you. If you admit that you owe the money, then the court may enter a consent judgment against you. Perhaps you can work out payment terms with the creditor. Ultimately, if the creditor has a judgment, it gives the creditor the right to enforce the judgment against you, by taking certain actions. For example, the crediotr might have the right to garnish your wages or seize your bank accounts or personal porperty, etc. These enforcement mechanisms vary from state to state. Some states don't allow wage garnishments, for example. The judgment might also attach to any land you own. So, if you try to re-finance, you must first pay off the judgment, including all post-judgment interest, and possibly attorney's fees if the court awarded any. The judgment will also affect your credit. There may be other consequences that I have not mentioned. As always, postings on this website do not substitute for the advice of an attorney retained by you. No attorney/client relationship is created by these postings. Good luck.
Attorney Teague provided a good answer above. Like him, I too am not licensed to practice in your state -- but I have written a legal guide that addresses the option a judgment creditor has against a person in your shoes in Wisconsin. This guide might provide general information useful to assessing your situation in addition to the answer above. Here is the link:
The plea will fall on deaf ears.
But you will not be arrested.
There is no such thing as a debtor's prison.
You should tell the court that you can pay something, anything.
Even if it is a small amount per month.