defamation

What is the name of your state? Vermont

a few weeks ago, my 3 yr. old went next door to play with a little girl that she has been playing with for a year. the girls mother called my daughter names and told her to get the f*** out of her yard. i called the neighbor to ask her what was going through her head to speak to a small child in that manner and she began swearing at me. we exchanged some words and she threatened to call the police and file harassment charges. to my surprise the police showed up and she made false statements against me to the officer and made threats of SRS(child protective services) to him. the officer found that the allegations made by the neighbor were untrue and unsubstantiated. after the officer left, the neighbor called me and wanted to call a truce because the police wouldn't arrest me. i of course said no. the following morning, SRS showed up with a three page statement(all untrue) that was filed by the neighbor. SRS closed the file the same day because there was no truth to the allegations and the report was unfounded. (i have copies of the police report and the letter from SRS stating there was no bases for the call). we both receive housing assistance and the reason i tell you this is that a few days later she called the housing authority and told them that my husband was in jail for excessive drinking and domestic violence and that my children were in danger, of course none of this is true. granted my husband is on probation for DUI, which was some time ago. anyway, when housing didn't work, she called probation and said that my husband was driving(you see my car was getting a front end alignment and i was home) and he wasn't. my question is, can i sue her for slander(three counts, plus two for my husband)? what court do i file the claim in? what forms do i need to fill out to file the suit? i have already tried small claims. i am at wits end and this woman has yelled at children belonging to three seperate neighbors.