Customer lost power to the living room receptacles as well as the basement lighting circuit. We found that both breakers feeding those circuits were tripping off. After further investigation we found that the 3-way at the top of the basement stairs was shorting out the circuit when any of the 3 switches were turned on. We also found that the metal connector in the receptacle box in the left corner of the living was cutting into the hot wire causing the breaker to trip. While checking the wiring in lights and devices we found that the insulation around the wires are falling to pieces leaving exposed conductors. Recommend re-wiring of branch circuits to prevent further issues. We replaced the broken 3-way switch at the top of the stairs and taped up the bare wires as good as possible. We replaced the damaged receptacle in the living room exterior wall to the left of the window and taped up the wires as good as possible.