I'm not sure the actual idea outrages people, but it's more the illogical application of your rules that leaves this idea open to serious criticism.
Of course I'd like to see my taxes better spent, on schooling or the NHS (etc. etc.), but the idea that prisoners fund themselves is flawed. Some public money goes to the prisons and we have to accept that, even if we don't like it.
Forcing a prisoner to pay for his own incarceration is like kicking a man when he's down. I'm NOT defending a prisoner, but we need to treat these people with respect alongside appropriate condemnation. If we take their house (assuming the bank doesn't), how can they get back on their feet an re-integrate into society? Having no money or means and a criminal record (so employers won't look twice at you) is a sure fire way to push someone back into criminal activity just so they can eat. And as a sub-issue, those people would then just end up eeking out their money back through benefits anyway.
That's presuming that people have money in the first place. What about burglars who re-offend to feed drug habits? The same as muggers or vagrants? These people have nothing to begin with; that's why they commit crime.
Also, punishing a family is ludicrous. As had been noted above, what if the family are the victims? As Barmaid correctly says, provisions already exist to remove monies where the circumstances warrant. What if, as happened recently, the woman in the link below hadn't informed the police because her house would be 'taken' from her? I'll bet if you were a prospective girl's parents, you'd be singing a different song.
Not the BBC link, but:
http://www.belfasttel...r-14562248.html?r=RSS