A debt management firm says an ongoing failure to deal with bad debt is costing the economy more than $2 billion a year.
DebtManagers buys non-performing debts from businesses and works directly with debtors to recover the debt, by stopping fees and freezing interest rates, with a repayment plan tailored to each customer.
"We urgently need to lift the standard of debt collection in this country," DebtManagers chief executive Charles Whiting said.
"There are around 900,000 Kiwis struggling with debt today, both to private companies and to the government.
"Bad debt left unchecked and poorly managed can become debilitating debt, and this has an extremely negative impact on people, their mental health, relationships, physical well-being, not to mention their families, and can even manifest into violence and crime."
Whiting said its approach to debt management delivered a social return on investment of $2633 for every customer, or $7.30 for every $1.00 the company invests.
"If everyone involved, whether in the private or public sector, had a comparable approach and behaved in a more socially responsible way, that $2633 well-being multiplier would generate over $2.3 billion worth of social good in areas such as mental health, reduced addiction, or risky behaviour."
Whiting said businesses had a role to play in helping consumers manage debt, but so did government.
"Sadly, our government agencies are some of the worst offenders, carrying out minimal, if any, affordability or vulnerability assessments before they extend loans, then using their statutory powers to make mandatory deductions to wages," he said.
"This is unlike in the private sector which often has personal liability for putting an individual into hardship as a result of poor lending or collections practices."
New Zealand was of the few developed countries without any regulation on debt collection, with no licensing system for debt collectors and no legislative minimum standards of conduct, Whiting said.