Most of the factors that are listed in the BIA are directed towards dishonesty, non-cooperation in the bankruptcy process, or some other misconduct, although the list also covers some facts that may relate to a lack of financial management skills.69Courts have indicated that there is a need to send a "strong message of condemnation" where the debtor is guilty of fraud or dishonesty, since this will undermine the integrity of the insolvency system.70
A court cannot grant an order for an absolute discharge if there has been proof of one of the enumerated facts. A court is not restricted to a consideration of these facts, and there are many cases in which the court considers factors that are not contained on the list. The analysis usually begins with the observation that an effort must be made to balance the interests of the bankrupt and her creditors and to preserve the integrity of the bankruptcy system.71The discussion that follows examines some of the major ideas and approaches that are revealed in the case law in relation to other factors that a court will look to in attempting to achieve this balance.
Upon bankruptcy, the debtor’s non-exempt assets are available to satisfy the claims of creditors, but the post-discharge assets are not. The impact of this rule on debtors differs depending on the extent to which a debtor has invested in his future earning capacity. Debtors who have increased the value of their human capital are better off than those who have directed their efforts to the acquisition of assets. Courts have taken this into account in at least two contexts. First, in bankruptcies of professionals, such as doctors and lawyers, courts have made the discharge conditional on payment of a substantial portion of future income.72It might be argued that the BIA now takes into account the enhanced earning capacity of the debtor by requiring surplus income
to be paid before an automatic discharge is obtained, and that there is no further scope for considering the future income capacity of the debtor. However, it is by no means clear that courts will regard this as a limitation on their power to consider future income earning capacity. Courts have viewed the existence of the superintendent’s standards for surplus income as a reason for not following an older line of cases that gave special consideration to the debtor’s "station in life" in determining how much of the future income should be made available to the creditors.73This approach to enhanced future earning capacity can also be ob-served in student loan cases involving private lenders or that otherwise are not covered by the provision that makes government student loans non-dischargeable.74Courts have made orders of discharge conditional on the repayment of substantial amounts where the earning capacity of the debtor has been enhanced for the future by the education paid for by the loans.75They do so on the theory that education should be treated as a capital asset that brings benefits throughout the debtor’s working life.76
Courts will also consider the nature of the claim held by the creditor. A creditor who extends credit in an ordinary commercial transaction will generally contemplate the possibility of non-payment. The creditor chooses whether or not to extend credit to the debtor and is able to diversify any loss caused by non-payment by charging a rate of interest that reflects this risk. An...