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I'm in the middle of a garage/apt project and ran into an issue yesterday. Here's my layout.

I have a 200Amp service meter with two 100 amp breakers just after the meter....one breaker feeding the house and the other feeding the garage. The garage has a 100amp panel with a 60amp sub panel feeding an apartment above the garage. The 100amp garage panel is fed with 2 hots, a neutral, and a ground.

I have a 60amp 2 pole breaker installed in this panel to feed the 60amp apartment panel....2 hots, a neutral and a ground. I have two circuits wired from the 60amp apartment sub panel so far. One 20amp for some outlets in the apartment and a 15amp circuit for some lights in the apartment.

Yesterday, I had removed the 15amp light circuit breaker from the bus bar to do some work on that circuit. I pulled one of the light switches from the box and began to detach all my wires....suddenly there was a significant ARC that tripped the "main" 60 amp breaker feeding the sub panel.

This is concerning....i don't understand how the circuit still had power with the breaker disconnected physically from the bus bar. Any thoughts or insight? Any help would be appreciated.

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    You disconnected the wrong breaker, there's a short-circuit backfeeding the circuit, lightning struck the building, neutrals on multiple circuits are interconnected, etc. Without being there, or having more information, it's difficult to track down the problem. Have you tested the wires using a voltmeter/multimeter? – Tester101 Nov 4 '15 at 2:39
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    Wiring error (item the first) and way too much trust (item the second) - NEVER work on a circuit without VERIFYING that it's really, truly dead - or you may become that way sooner rather than later. Take a voltmeter and see if the light circuit is dead with the 20 amp circuit "off" - if so turn the 20 amp circuit on and see if it's dead then. One of those things is probably not true. – Ecnerwal Nov 4 '15 at 3:06
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    One tip (which you already learned), even when the power is "off", always double check. Even when rewiring a string of outlets and know that they are all off, I'll check each wire (hot + neutral) with a non-contact voltage tester (which I already tested on the circuit when the power was on to be sure it was working). Some don't even trust a NCVT and will use a multimeter or other contact tester since a NCVT is not 100% infallible. – Johnny Nov 4 '15 at 3:08
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    yeah, i usually check everything with a multimeter, but didn't this time. certainly will going forward. something to add....The subpanel has two neutral bars in it tied together with a strap. neither of the neutral bars are bonded to the panel. I added my own ground bar that is connected/bonded directly to the panel. the ground bar is grounded only by the ground wire coming from the 100amp panel. there is no ground rod for the sub panel. There shouldn't be anything wrong with this setup, correct? – Mnik Nov 4 '15 at 14:48
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    i found it. the sheathing on the main supply line was slightly severed. thanks for the help everyone! – Mnik Nov 5 '15 at 1:15
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As it turned out, according to the OP from his comment:

i found it. the sheathing on the main supply line was slightly severed.

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You may have a couple of things going on. Turned off wrong breaker, or back fed in splice. I would look at why the 60 blew. Your smaller breaker should have tripped first. You may have a clamp pinching wire or a nick when you stripped wire . Shut of the feed to sub-panel look at wire for nicks and clamp cutting in. And the check your circuits with a meter.

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