What would you do?

So my husband and I have been married for 4 years now and we have two beautiful boys together and custody of my stepson (who I consider my own). For years his mother and I haven't really been very fond of each other but we never got into big problems over it we would just overlook things, here recently going in a year ago we found out she has a big problem with pills and has even had a wreck with my stepson because of them. After that I wouldn't allow my kids to ride with her and she even has borrowed over 7000 dollars from us and over 50000 from other family members (not to mention losing her home for not paying bills) and her husband is oblivious to it all. She called me up about 2 weeks ago yelling and bad mouthing me for not paying her bills where I told my husband I am done with her . (This lady even went to the loan company and went off on the manger because they called to remind her of her bill) now getting to the point .... We haven't spoke in a month and I refuse to till my husband defends me for her calling me and the community bad mouthing me bout me not paying for her living. He says I need to get over it that it isn't a big deal and we need to be the bigger people where o feel she should be confronted. Am I wrong ? Am I wrong for thinking about telling my husband if he defends her he just go live with her???