A woman with eight children living in emergency housing is facing a debt to Work and Income of $100,000, which she will never repay, a support group says.
Housing action organisations say homeless people are racking up huge debts after borrowing from Work and Income to pay for emergency accommodation such as motel rooms.
Auckland Action Against Poverty said the mother and her eight children were evicted by Housing New Zealand months ago after it found the house was contaminated by methamphetamine.
The organisation's coordinator, Alastair Russell, said it was not clear if the woman caused the contamination.
He said the family had been living in emergency accommodation costing more than $1200 a week and she had already borrowed $60,000 from Work and Income to pay for it.
"Housing New Zealand have banned her for 12 months from seeking their assistance so she'll clock up this debt for another six months and then go back to Housing New Zealand seeking assistance with a debt probably in excess of $100,000."
Mr Russell said the woman will not be able to repay the debt.
He had asked the government to waive the emergency housing debts because they are causing hardship.
"There is the clear capacity for Work and Income to make this a payment so it doesn't cause financial hardship, but at this stage there's no will to do so and I think that the minister needs to make a call on this and actually direct her staff to do the right thing."
The Ministry for Social Development (MSD) said it had been working with the woman and that she had been evicted from three state houses for using the illegal drug methamphetamine, known as P.
The woman told RNZ News she was not a meth user but MSD deputy chief executive Carl Crafar said that was not true.
He said she had lost a judicial review of the decision to evict her from her last home because of P use, and she had admitted using the drug in two other houses.
The head of Mangere Budgeting Services Trust, Darryl Evans, has been helping a solo mother with two daughters who is staying in a motel for $700 a week while she waits for a Housing New Zealand house.
After spending nearly seven months in a motel she already owed Work and Income more than $20,000.
Mr Evans said she would take years to repay it.
"She already has debt to creditors, now she has a WINZ debt and the reality is that - whatever level she pays that - I would suggest she'll be paying it for the next 15 to 20 years."
He said the woman, who has a sick daughter, would have to sacrifice buying good quality food for her children in order to repay the debt.
"When I say to her, 'how do you see yourself getting out of this debt?' she just doesn't see it and she tries to not think about the money. What she's concentrating on is trying to achieve a state house with Housing New Zealand - somewhere warm, somewhere safe and somewhere where she can work on getting her daughter well."
Monte Cecilia Housing Trust chief executive Bernie Smith said he was seeing more homeless people with debts of tens of thousands of dollars.
"There's no way they are going to be able to sustain a tenancy out the other side because they'll be repaying debt rather than (being able to) afford a rental."
Mr Smith said it added to the housing crisis and the government should wipe the debts to give people a chance.
Social Housing Minister Paula Bennett would not comment on the case of the family facing a $100,000 debt.
Work and Income said it could not talk about individual cases without a privacy waiver.