If someone get sued and they live in your house can you items or house be taken away?

Location: Colorado

My grandma is going to send a signed letter to a company via certified letter tomorrow. I have tried to stop her but my mother is in another state across the country and she called the neighbor to take her. She has dementia and earlier this year her son died. I guess he had 3k in some account somewhere with these people she is sending the letter to. I don’t believe her son had a will or marked her as a beneficiary of anything. No holographic will either since there was no note let alone dated and signed. She believes this money is hers though. She is basically sending a letter stating that they have 10 days to pay up or she will have her lawyer handle it which is not even a lawyer who practices in that field (when my father died he had a holographic will and we contacted him and he said he does not do that sort of work). Looking it up this could be considered extortion and she could be held liable. She does not have her name on the house deed but she does live with us. If they went after her for extortion over this how much do you think they would go after her for and do you think they would be able to collect stuff that belongs to us? I live in Colorado USA btw