Can a house that is in a trust be taken away if my wife's grandma (who initiated the trust to her son, my wife's dad) is being sued due to non payment of accounts(I don't know the details.)
The grandma put the house in a trust to her son, we are paying to live in this house, but have only a verbal agreement.

Depends on the terms of the trust. If it's a revocable trust, it might be attachable.

Agreed, it will really depend on how the trust was set up, the type of trust and so on. An attorney needs to review it.