Be careful. If he files bankruptcy, he is protected from creditor actions by the automatic stay. But, if you act properly, you can avoid getting in trouble. First, he has no choice but to list all his debts and all his assets on the bankruptcy papers or get in trouble for failing to disclose. If the loan was originally in your name, his bankruptcy will not change that. If it was not in your name, you may be getting out of the obligation to continue paying. Settling like he proposed is an option, but not in secret or you can both get in trouble and lose money.
The dialogue on this website does not constitute legal advice nor does it form any sort of attorney-client relationship.
If you are not in compliance with your settlement you have a problem - one that will not be affected by any bankruptcy filing.
Under the rules governing the conduct of attorneys in New York it may be necessary to remind you that this answer could be considered attorney advertising.
If there is a divorce decree that says you have to pay it, then you need to pay it unless you file a Chapter 13 bankruptcy or a modification to the agreement. You should contact a CA divorce lawyer to see if there is anything you may be able to do in terms of the Decree. If the Order says you have to pay the car loan and it cannot be modified then you may want to pay the bank directly but make sure to obtain proof of the payment.
Sign up to receive a 10-part series of useful information and legal advice about the divorce process.