Work and Income has been accused of "systemically discriminating against women and Māori" by making them pay back debts at faster rates than other groups.
But the Ministry of Social Development (MSD) says it's simply because they borrow more.
Auckland Action Against Poverty (AAAP) obtained documents under the Official Information Act showing 224,479 people owe money to Work and Income, up from 169,888 five years ago.
The total amount owed has risen from $117 million to $307 million, and the average debt doubled from $690 to $1368.
"Low benefit levels compounded by an increase in rents have led to more people entering debt with Work and Income to cover things like rent arrears, power bills and other expenses," said AAAP spokesperson Brooke Fiafia.
"The offset on benefit payments created from this debt means people then have even less money to cover basic expenses and require further special needs grants. This creates a vicious debt trap with Work and Income and loan companies."
The figures show women and Māori are typically required to pay back their debts faster than others.
In 2019, women on average were required to pay back $9.59 per week, and men only $6.35. Māori averaged $10.34, while NZ Europeans were asked to pay back $7.31 a week.
A spokesperson for the MSD said its staff "aim to ensure clients make the best decision for their personal circumstances when paying off debt" and a "range of factors are considered to prevent undue hardship".
"These include the ability to meet their needs, their amount of existing MSD debt, existing recovery rates and the effect the rate of recovery will have on their ability to support themselves," said George van Ooyen, group general manager client service support.
He said the figures represented the demographic makeup of Work and Income clients, and which of them are more likely to apply for borrowing.
"More than half of our clients are women, who owe more than 60 percent of the debt. This is influenced by women being more likely to apply for recoverable assistance for a household, even if they are on a joint benefit.
"As of June 2019, more than 80 percent of Māori working-age clients on benefit had a debt with MSD. The level of repayment is influenced by the level of debt a client has, as well as the makeup of that debt.
"It is likely that clients with higher debt levels will have higher repayment levels."
Māori in 2019 typically had a debt of $1595.43, compared to the overall average of $1368.39. Women averaged $1576.77 and men $1030.90.
Van Ooyen said debts that result from borrowing, rather than arrears, come with timeframes for paying them back - perhaps resulting in higher repayment levels.
"We can adjust repayment levels if circumstances change and encourage our clients to contact us if they would like to discuss this. This ministry also offers non-recoverable assistance for those seeking financial help."
AAAP said all the $307,174,525 in debt should be wiped because it "wouldn't put the Government's books at risk but would ensure less families are having to sacrifice putting enough food on the table because of the offsets".
Van Ooyen said the ministry doesn't have the authority to write off anyone's debt "except in exceptional circumstances".
The Government recently applied restrictions on how much interest loan sharks can charge desperate clients, fast-tracking the legislation in fear people out of work thanks to the pandemic would hurt themselves financially in the long-run.