TS, you have been scam by the previous owner. One of the reason is because the previous owner maybe signing for plans like Maxis zerolution or any telco plan, then instead of using the phone the owner sell it and then default on the monthly payment. So in the end telco block that phone from being use. they give out phone with very low downpayment or no payment, and those people take advantage to earn some money by selling it. Therefore, be careful who you buy phone from.
I personally would say, it is as useless as a sheet of junk paper now, since replacing the chip means you will definitely void warranty and possibly brick the phone if you ever update the iOS in future. You can still try to spend a few hundred to replace the chip, but there is no guaranty it will have no problem later.