One of the major issues with shame is that it blocks the essential process of recognizing and repenting of sin. This may seem counter-intuitive. Shame-filled people feel bad about themselves and feel they do wrong all the time. Shouldn't they be overly sensitive about their sin?
The answer is no. At least, not in the right way.
One of the strange effects of shame is that it blocks the normal process of recognizing and making it right when you've done something wrong. The reason for that is that the shame-filled person is already so overwhelmed with feeling bad about him or herself, that he or she blocks out the feeling of “badness”. They can't admit they've done wrong because it would simply be too much. They have no confidence of being forgiven, no safe base to come back to from the devastating feeling of having messed up.
Shame leads to a broken and wildly inaccurate “guilt meter”. Shame-filled people feel disproportionately bad for things that are not wrong or not their fault. They feel guilty for making anyone feel bad about anything, and are incapable of setting appropriate boundaries because of their fear of making anyone displeased with them.
On the other hand, they are often incapable of recognizing the very real faults or flaws that they should seek to change. Or if they do, they beat themselves up for them and feel even more shame. The knowledge of their guilt drives them further into the darkness, instead of toward the God of love who will forgive and help them change. If you're certain you'll only be condemned, why would you admit fault?
Shame-filled people are stuck. They are unable to make any real progress toward self-improvement or in Christian terms, sanctification. They are bogged down at the side of the road with four flat tires.
Being able to recognize a wrong you have done, feel healthily sorry for it (as opposed to feeling bad and worthless as a person), and take steps to change it (in biblical terms, repentance) requires a certainty that you are loved and accepted. Shame-filled people can't do this because for them, it would be like falling off the map. If you're already banished to the edges of the world by your inherent badness and can't earn your way back, acknowledging that you've done something wrong would be to fall off into the abyss of darkness. It's too costly.
By contrast, when you understand that you are loved and accepted and that there is nothing you can do to change that, this frees you to be able to recognize behaviours, patterns or attitudes in yourself that aren't good, admit those to God and to appropriate caring people, ask for forgiveness and grace to change, and take the appropriate steps. It's like putting air in those four flat tires so you can continue driving down the road. Without it, you can't even start.
This is why a proper understanding of who God is, is so essential. He can be trusted. He is not capricious, fault-finding, unjust, angry. He is who he said he is and does what he says he will do. He is exactly the same today as he has always been, and as he was when he wrote Scripture. When he says he forgives, he means he forgives. When he says he casts all our sins into the depths of the sea, he means it. When he says, “If we confess our sins, he is faithful and just to forgive us our sins and to cleanse us from all unrighteousness” (1 John 1:9) it's because he does just exactly that. He's not secretly angry and disapproving. He doesn't cast us away when we sin. That's a legacy from a distorted past that gives us a false understanding of a God who has no imperfection.
If you're dealing with someone who suffers from shame, it's essential to be extremely careful about how you address behavioural change. It's very difficult for a shame-drowned person to receive even loving correction. When a shame-filled person is told “You did something wrong” he or she hears “You're a bad person who is not accepted.” Rather than simply addressing the symptom (the behaviour) seek to address the underlying problem (the person's sense of worthlessness and need to understand they are loved). It's essential for all of us to be able to access the normal sin/guilt/repentance/change process. But for a shame-filled person, an integral foundation of love and acceptance, by both God and those in her faith community, must be laid before she can do this. Always, always, always, call for change out of this foundation of unconditional acceptance, because that is how God changes us. We don't grow to earn his acceptance; we grow because we have already received it.