A Microsoft Xbox 360 console that refuses to play games due to ‘bad debt’ has raised a few eyebrows on social media. Cody, a co-owner of a retro and import video games retail business, remarked upon his surprise at booting up this particular Xbox 360 and finding “an error I’ve never seen before.” However, a Microsoft MVP has piped up to explain that the system’s 17559 update removes any such restrictions.
Repairing Xbox 360s today and found an error I’ve never seen before. So apparently the previous owner somehow has bad debt with Microsoft and so this 360 is locked out forever. pic.twitter.com/ZrPgbsDB7qAugust 23, 2025
The tide of collective wisdom following Cody’s post suggests that the restricted Xbox 360 was purchased through an affordable offer from Microsoft. Under the program, you would maintain monthly payments for a minimum term to eventually own your console, without further restrictions.
According to an Xbox 360 era report published by GamesRadar, Microsoft launched the new easy payment schemes for wannabe console owners in Q4 2012. Under the agreement, purchasers would put down a modest initial sum, starting from $150. Then they would commit to “a contractual obligation for two years of Xbox Live membership, adding up to $360 by the end of the agreement.”
The article doesn’t say what would happen if the contract were broken. Now, 13 years later, we are seeing what would happen. Perhaps people generally stuck to their obligations, as this ‘bad debt’ message has stirred a lot of interest.
Why not just hack it?
Many commenters suggested that Cody ‘hack’ the Xbox 360 to bypass any restrictions. Just two weeks ago, Modern Vintage Gamer (MVG) published a video on the Badupdate Exploit. The hack has now reached version 1.2, and is enhanced so that “Any Xbox 360 can now be hacked in less than one minute,” he explained.
However, there’s a little problem with that plan. The exploit requires the user to run the Rock Band Blitz trial from a USB flash drive. This particular Xbox 360 appears to be so locked down that even running a trial wouldn’t be possible.
Yep, the block is set in the console keyvault. The rental program was shutdown and msft at the end of things just cut their losses on any blocked consoles. Latest update no longer honors that flag in the keyvault.August 25, 2025
Microsoft MVP proposes an elegant official solution
Thankfully, no hacking shenanigans should be necessary to get Cody’s Xbox 360 back into a fully enabled state. Eric Marsi, a Microsoft MVP, piped up to explain that “If you update it to 17559, the lock will go away.” Marsi later explained that this update for the 360, which was released in Nov 2019, cuts Microsoft’s losses on any blocked consoles, as it no longer honors the rental program flag in the keyvault.
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